Economy responds to booster shots

NEW DELHI: The economy has started responding to the stimulus measures taken by the government, a meeting of top government officials chaired by Cabinet secretary KM Chandrashekhar said on Tuesday.

Top officials from key economic ministries such as finance, commerce and micro, small & medium enterprises resolved to focus on the problems of implementing the stimulus measures, one of the members present at the meeting told ET. The government had unveiled two packages in December and January to stimulate the economy, which included an across-the-board 4% excise duty cut, higher infrastructure funding and tax refunds to exporters.

Members assessed the extent to which banks have reduced lending rates and its impact on the revival of the economy. They also reviewed the impact of incentives extended to exporters.

Mr Chandrashekhar is again meeting secretaries of the key ministries next week on how to speed up refund of service tax paid by exporters, he said.

The government���s policy is that taxes should not be exported, and hence it was decided that the service tax element that goes into exported products should be refunded. However, service tax refund has not been happening due to administrative issues. ���There is no point in having any number of paper orders. We need to deliver what is promised,��� the official said.

The first stimulus package in December promised service tax refund of foreign agent commissions and on output services while availing benefits under the duty drawback scheme.