Expressing discontent over the estimated Rs 30,700-crore stimulus package unveiled yesterday, several economists said the government could have done more to boost the sagging growth and restore business confidence.
Although the Chairman of the Prime Minister’s Economic Advisory Council, Suresh Tendulkar, expressed satisfaction at the size of the package, the Director of think tank ICRIER, Rajiv Kumar, felt that the government could have done more.
According to Tendulkar, “fiscal package is sufficient”. “I expect excise duty cut will give some relief to producers. The economy should look up after the package. It is a systemic effort coupled with the monetary policy.”
On the other hand, Kumar said, “Given that inflationary pressure is not there. Food and energy inflation is not the danger, fiscal stimulus could have been larger.”
Pointing out that the package will help in addressing some of the problems, Crisil principal economist D K Joshi, said, “It will not lead to turnaround of the economy.”
In order to boost demand and propel economic growth, the government slashed excise duty by 4 per cent across the board and announced raising the public expenditure by Rs 20,000 crore in the current fiscal. Taking into account the revenue loss and additional expenditure on various accounts, the package is expected to cost the exchequer Rs 30,700 crore.
Referring to across the board cut in excise duty, Kumar said, “The cut could have been graded to make it larger with special target on products consumed by the lower income group.”
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The government, he said, should also address institutional reforms concerning labour laws and bottlenecks hampering growth of infrastructure sector.
Crisil economist Joshi opined that “just by slashing auto prices, the demand will not go up. It will be very difficult for the sector to reach the level it was two years ago”.
As regards government package for the infrastructure sector, he said, “The package given to infrastructure is welcome but more strong approach is needed as it is facing big problem.”
Axis Bank economist Saugata Bhattacharya, however, said, “Package will have a large and big impact on the infrastructure sector but it should be implemented through commercially viable projects... The incentive given to exporters will certainly boost their business.”
“As far as the promised banking sector package for housing loans up to Rs 20 lakh is concerned, we have to see the actual package,” he said.