The Central Government of India gave INDIA Inc the a good NEW YEAR gift by announcing the second fiscal stimulus package which can be the last for this fiscal, the focus of which is to provide more liquidity and cut the cost of funds. “The scale of liquidity potentially available through this window is Rs.25,000 crore,” said Ahluwalia, who briefed reporters here, after it was approved by Prime Minister Manmohan Singh.This came almost a month after the first on December 7' 2008 and covers a series of measures aimed at easing credit delivery to sectors impacted most by the economic slowdown, but contains limited deficit-financed government spending.The second instalment liberalised overseas borrowing norms, restored benefits to exporters, set up an alternative channel of finance for non-banking finance companies and allowed state-run India Infrastructure Finance Company Ltd (IIFCL) to issue additional tax-free bonds.
Exporters, too, will benefit with an extension of the duty-entitlement passbook (DEPB) scheme and enhanced duty drawback benefits on items like knitted fabrics, bicycles, farm hand tools and some categories of yarn.
Apart from the higher depreciation benefit, the automobile industry can benefit from an arrangement that is being worked out with leading public sector banks to provide a line of credit to lending institutions to finance commercial vehicles.
The realty industry can benefit from the permission to use external commercial borrowings if intended for the development of integrated townships, while enhancing the level of credit for micro units.
In order to give a boost to the corporate bond market, foreign institutional investment limit in rupee-denominated securities would be increased from $6 billion to $15 billion.
With the package the government is hopeful of seven per cent growth and there won't be another package till June.
Now we have to watch whether this will act as just a sentimantal booster to the entire industry or will result in a helping hand to the economic slowdown.
Now we have to watch whether this will act as just a sentimantal booster to the entire industry or will result in a helping hand to the economic slowdown.
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