The government yesterday announced a package of measures to arrest the industrial slowdown but rejected any ad hoc responses like pump-priming the economy through enhanced government expenditure and effecting a mid-year tariff review.
The package includes the constitution of an inter-ministerial group to review the issue of duty-free import of capital goods, a Prime Ministerial review of public sector projects to expedite investments in the core sector, strengthening of the anti-dumping cell in the commerce ministry and amendment of the Urban Land Ceiling Act.
The government also part met industrys demand to step up expenditure on housing projects by agreeing to set up a working group under the urban affairs and employment ministry. This group will prepare a blueprint for stepping up government expenditure in this direction.
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In addition, the government proposes to review the environmental norms to evolve an eco-and industry-friendly forest policy within the next four weeks, which will make availability of raw material easier for the paper and paper products industry.
An official spokesman quoted Union finance minister P Chidambaram as saying the government would announce certain decisions by October 21, after taking into account the concerns expressed by the manufacturing sector.
Going by the response of the industrialists at the brainstorming session, the proposed package has gone down well and there is belief that a turnaround in the economy is possible in the second half of the financial year.
Earlier, Prime Minister I K Gujral kicked off the conference in the morning at Vigyan Bhawan. The economic policies, particularly the reforms process, will continue unchan-ged. The government is committed to sustaining the economic momentum, Gujral assured the audience.
In his brief address, Gujral said the government was trying to initiate a new type of dialogue with industry which is reflective of the liberalisation process. The dialogue enables the government to understand and finetune its policies, he said.
The Prime Minister said there were several factors underlying the slowdown and the government was trying to address them in the short term and in the long term.
Finance minister P Chidam-baram told the meeting that the country had never before been blessed with such a unique constellation 4 per cent inflation, lending rate at 13.5 per cent, banks flush with funds and $30 billion in foreign exchange reserves and hence the downturn was temporary. He expressed the hope that during the next five months, the upturn should be sharp and healthy.
According to Planning Com-mission member Arjun Sengupta, While the present slowdown appears to be a temporary phenomenon, you should not suffer a panic reaction and reverse policy.
He said the plan expenditure, particularly distribution of capital expenditure in construction and housing sectors, would stimulate demand. Fine tuning of policy may be called for, but not a wholesale reversal of policy, asserted Sengupta.
In an intervention, Mahindra group chairman Keshub Mahin-dra pointed out that the boom in tractor and motorcycles sales indicated that rural demand was on the rise.
Throughout the discussion, concern was expressed at the lax demand for a variety of goods, particularly steel and cement. It was suggested that the government invest more in infrastructure and give a boost to the construction industry, especially the housing sector.