Date: January 23, 2009
Ref. No. MPML/PMS/202/2009
GOVT TO UNVEIL 3RD STIMULUS NEXT WEEK
The apex committee monitoring the health of economy, headed by Prime Minister Manmohan Singh and consisting of his senior cabinet colleagues, is meeting industry representatives in the Capital on Wednesday before finalising the third stimulus package expected early next month.
The government is considering an industry proposal to give exporters further concessions on borrowings. The government's concern about the plight of exporters- and its potential political fallout - was evident. Government is working on a comprehensive package for exporters as it fears at least 10 million job losses in the export sector by the end of this financial year alone.
Despite adequate liquidity in the system, many exporters are still paying an effective rate of 8-9% even after taking account of the 2% subvention already available, industry chambers have said.
Even the floor rate on the interest charged has been fixed at 7% while industry has constantly been demanding that it be brought down to 5% to enusre global competitiveness."The government should do away with the condition of a minimum interest rate of 7%, especially when competitor countries are making credit available at 5%,'' An additional interest rate subvention in the next stimulus package would help the export-oriented units to save millions of jobs.
The PM's apex panel consists of commerce minister Kamal Nath, planning commission deputy chairman Montek Singh Ahluwalia, RBI governor D Subbarao and former finance minister P Chidambaram, now holding the Home portfolio.
With manufacturing industry such as textiles, metal, capital goods, leather and chemicals already having announced a cut in production between 10% to 50% by March 2009, the government fears that any failure to revive these sectors would lead to millions of job losses.
A FICCI survey had earlier projected negative growth in the textiles, leather and metal sectors in the remaining part of this fiscal. While the metal products industry reported negative growth of 17% in August, the textiles and leather segments both registered negative growth in September.
(Source: -Economic Times)