2nd stimulus may be the last
Feedback that government has been receiving has seen industry urging it to deliver a "message of hope" and this lay in managing perceptions of doom and gloom.
By Rajeev Deshpande, TNN |
NEW DELHI: The Manmohan Singh government is readying a New Year booster for the economy in the form of an economic stimulus part-II and is signalling that while major industry concerns are being addressed, the forthcoming financial fillip will not be followed by another for a while.
Feedback that government has been receiving has seen industry urging it to deliver a "message of hope" and this lay in managing perceptions of doom and gloom, which have been enforced by news of falling revenues, operational losses and lay-offs . Recognising deepening investor anxiety and hesitancy, government is keen to prevent a "negative cycle" from gathering momentum -- where bad news becomes a self-fulfilling prophesy.
The much-discussed stimulus-II is still in the works and may take another week of fine-tuning before it is rolled out with government keen on ensuring that key issues are taken into account and it is not required to come out with another instalment soon after . This could see more consultations with the apex committee, headed by Prime Minister Manmohan Singh, trying to cover most bases.
It is pointed out that there was no time-frame for stimulus-II to be announced and the government needed to manage expectations on this score. Both consumers and producers were waiting to see what the government planned to do ��� and this was only to be expected ��� but the apex committee now wanted to clearly indicate that the stimulus plan was not an ongoing serial sop story.
Measures under consideration essentially deal with "credit mechanisms" by making more funds available and encouraging banks to chip in by way of lowering lending rates. Here, the view gaining ground is that sectors like real estate may not get tax breaks but be given swifter access to funds. The government expects the sector to cut back a bit on margins as well.
For export-driven sectors, the stimulus could hold more duty relief and it is being felt that with increased competitiveness , exporters might keep their heads above water. It is felt that given India's share of global trade, it could hold its own. Just next door, Bangladesh exports had registered a rise.
While some sectors have not passed on the benefits of the first part of the stimulus package, it is being argued that industry would need to take a few hard decisions as well. In a survivor of the fittest scenario, various sectors needed to assess where holding on to margins or not responding to the government's initiatives helped their overall profitability. Excise collections had fallen, so had indirect tax returns, but these were decisions that the government knowingly undertook and various sectors needed to see how to be competitive and win consumer confidence.
Despite internal security and relations with Pakistan dominating public discourse, the PM has remained quite focused on the economy and has been taking due note of projections on the global economy.
Feedback that government has been receiving has seen industry urging it to deliver a "message of hope" and this lay in managing perceptions of doom and gloom, which have been enforced by news of falling revenues, operational losses and lay-offs . Recognising deepening investor anxiety and hesitancy, government is keen to prevent a "negative cycle" from gathering momentum -- where bad news becomes a self-fulfilling prophesy.
The much-discussed stimulus-II is still in the works and may take another week of fine-tuning before it is rolled out with government keen on ensuring that key issues are taken into account and it is not required to come out with another instalment soon after . This could see more consultations with the apex committee, headed by Prime Minister Manmohan Singh, trying to cover most bases.
It is pointed out that there was no time-frame for stimulus-II to be announced and the government needed to manage expectations on this score. Both consumers and producers were waiting to see what the government planned to do ��� and this was only to be expected ��� but the apex committee now wanted to clearly indicate that the stimulus plan was not an ongoing serial sop story.
Measures under consideration essentially deal with "credit mechanisms" by making more funds available and encouraging banks to chip in by way of lowering lending rates. Here, the view gaining ground is that sectors like real estate may not get tax breaks but be given swifter access to funds. The government expects the sector to cut back a bit on margins as well.
For export-driven sectors, the stimulus could hold more duty relief and it is being felt that with increased competitiveness , exporters might keep their heads above water. It is felt that given India's share of global trade, it could hold its own. Just next door, Bangladesh exports had registered a rise.
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While some sectors have not passed on the benefits of the first part of the stimulus package, it is being argued that industry would need to take a few hard decisions as well. In a survivor of the fittest scenario, various sectors needed to assess where holding on to margins or not responding to the government's initiatives helped their overall profitability. Excise collections had fallen, so had indirect tax returns, but these were decisions that the government knowingly undertook and various sectors needed to see how to be competitive and win consumer confidence.
Despite internal security and relations with Pakistan dominating public discourse, the PM has remained quite focused on the economy and has been taking due note of projections on the global economy.
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