Lok Sabha

To minimize the impact of global economic crisis on the Indian economy, two packages of measures were announced by the Government on December 7, 2008 and January 2, 2009 essentially to boost demand from a macro economy wide perspective and also to focus on sectors of the economy that may be affected by the downturn. The measures announced span the entire spectrum of sectors of the economy. An additional plan expenditure upto Rs.20,000 crore covering critical rural, infrastructure and social security schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), Jawaharlal' Nehru National Urban Renewal Mission (JNNURM), National Rural Employment Guarantee Scheme (NREGS), Indira Awas Yojana, Accelerated Irrigation Benefit Programme and National Social Assistance Programme (NSAP) was included in the package. In addition, tax measures announced, inter alia, include: an across the board cut in CENVAT by 4 percentage points benefitting all sectors; specific measures on customs duties on sectors such as steel and cement through restoration of the levels of protection; service tax concessions and enhancement of drawback rates for exports. The other specific measures taken include: Interest subvention on pre and post shipment credit for labour intensive exports like textiles, leather, gem and jewellery, carpets and handicrafts; refinance facilities respectively of Rs.4000 crore for the National Housing Bank for housing sector and Rs.7,000 crore to the Small Industry Development Bank of India (SIDBI) for Micro, Small and Medium Enterprises (MSME) Sector; authorization to India Infrastructure Finance Company Limited (IIFCL) to raise Rs.10,000 crore through tax free bonds. An Apex Committee headed by the Finance Secretary is looking into the suggestions received by the Industry in this regard on an ongoing basis.

This information was given by Finance Minister, Shri Pranab Mukherjee in reply to a question raised by Dr. K.S. Manoj and Shri K.J.S.P. Reddv in Lok Sabha today.

Economic stimulus package combining fiscal support, tax concessions and targeted credit measures to sustain demand. A macroeconomic stimulus package combines additional plan expenditure for rural, infrastructure and social security programmes with fiscal and credit measures: an across the board cut in CENVAT, selective customs protection restoration, service tax concessions, higher export drawback rates, interest subvention for labour intensive exports, refinance support for housing and MSME finance, and authorization for tax exempt infrastructure bond issuance, coordinated by an Apex Committee headed by the Finance Secretary.