December 08, 2008 11:07 IST|
India Inc on Sunday welcomed a slew of measures announced by the government as a part of its stimulus package and expected demand in the economy to revive. But another set of industrialists felt the package was insufficient and wanted more measures. "Duty and tax cut will bring down prices. Interest rate cut will increase credit availability. These two moves will generate demand. The government is moving in the right direction," D D Rathi, director and CFO, Grasim [Get Quote]. The government on Sunday announced across-the-board cut in excise duty by 4 per cent and an additional spending of Rs 20,000 crore (Rs 200 billion) in the current financial year, aiming to perk up domestic demand in the economy. At the same time, the government unveiled a series of sector-specific measures that were impacted the most in the last three months.
It also announced the reduction of 4 per cent cenvat rate that can be passed on by the auto makers to customers and help clear inventory. It also asked public sector banks to formulate separate package for home buyers.
"It is a well-timed announcement. It will allow soft landing for the economy," said Venu Srinivasan, chairman and managing director, TVS [Get Quote] Motors. "The two-wheeler industry will benefit, but the government needs to do more on infrastructure projects so that the commercial vehicle segment can benefit. The infrastructure sector, however, felt the package was insufficient and wanted additional measures. "The government's package is inadequate. We expected at least $20 billion relief package, giving emphasis to the infrastructure sector. The current measures are insufficient to deal with the deepening crisis," said Subba Rao, CFO, GMR Group. "Capital formation is in danger. Equity and debt is not available, and a lot of projects are struggling. IIFCL will refinance banks Rs 10,000 crore (Rs 100 billion), which is good enough to just produce 2,000 MW of power when we need 80,000 MW," he added.