Core, exports likely to get Rs 17k-cr recovery pack this Sat

NEW DELHI: ET now has more details of the stimulus package for the economy hit by the global financial crisis and demand slowdown, formulated by a high-powered committee headed by the prime minister. An estimated Rs 15,000 crore is expected for the infrastructure sector from the budget while Rs 2,000 crore will be earmarked for exporters of labour-intensive products.

The commercial vehicle industry could receive respite in the form of reduced excise duty. An announcement on cuts in repo rate and reverse repo rate is also expected from RBI on Saturday. External commercial borrowing (ECB) norms may be relaxed to allow industry to source funds outside the country.

The stimulus package is slated to be announced this Saturday. According to government officials, special lines of credit will be provided for housing, exports and non-banking financial companies. This would ensure the funds crunch being faced by industry, particularly the housing sector, exporters and infrastructure sector, is mitigated to some extent.

RBI is expected to announce cut in repo and reverse repo rates to the extent of 200 basis points and 150 basis points respectively on Saturday. The Thai central bank cut its key rate by 100 basis points on Wednesday and the European Central Bank and the Bank of England are expected to cut rates before Saturday.

Australia slashed its policy rate by 100 basis points on Tuesday. While RBI might not cut the cash reserve ratio, banks would be asked to cut deposit rates.

About Rs 15,000 crore will be given to the infrastructure sector, a government official said, adding that infrastructure and housing will create a ripple effect in the economy leading to greater demand for steel, cement, capital equipment and labour. This would be the first tranche to the special infrastructure fund.

Exporters, especially those exporting labour-intensive products such as textiles, handloom, handicraft, leather, gems & jewellery and marine products ��� which have been hit most by the global slowdown ��� will get a bailout package of Rs 2,000 crore.

This includes service tax refunds, terminal excise duty refund and pending payments of duty drawback and from the textile upgradation fund.