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Friday, February 06, 2009

Pranab Mukherjee promises more measures for the economy

To ensure that labour intensive sectors are less adversely affected

Foreign Minister Pranab Mukherjee who is now also overseeing the finance portfolio today, 6 February 2009, said the government will come of out with more measures for the economy. He said government will take further steps to ensure that labour intensive sectors are less adversely affected.

A recent report by Ministry of Labour said that the economic slowdown claimed close to five lakh jobs in the December 2008 quarter in sectors that accounted for more than 60% of the country's GDP last fiscal. There is fear that job cuts will hit aggregate demand, mainly the discretionary spending by consumers, which in turn may accelerate the slowdown in the economy.

India's economy is expected to grow at 7% or less in the year to March 2009 due to declining exports and moderating domestic consumption, compared with 9% or higher growth in the last three years.

The government has already announced two fiscal stimulus packages to boost demand. In the first stimulus package announced in December last year, the government cut excise duties by 4% across the board, besides effecting a hike in planned expenditure. In the second package unveiled last month, the government announced various measures to boost credit flow to the industry and hiked the rate of tax refunds to exporters paid under the popular Duty Entitlement Pass Book (DEPB) scheme to the November 2008 level.

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