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More govt stimulus soon to push demand: Nath

January 19, 2009 16:19 IST

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Worried over the slowdown in industrial production and declining exports, the government said on Monday it will continue to provide stimulus to the domestic industry.

"The government will continue to inject adequate funds into the economy and will continuously provide stimulus to the domestic demand-driven economy," commerce minister Kamal Nath told reporters on the sidelines of CII's India-Africa Partnership Summit in New Delhi.

The government, he added, is 'putting in money in long-term developmental projects to ensure that the global economic crisis does not impact India in any serious manner.'

Already two stimulus packages have been rolled out by the Centre to neutralise the impact of the global financial meltdown on the country and the Reserve Bank of India [Get Quote], through a series of monetary steps, released about Rs 3,20,000 crore (Rs 3,200 billion) in the system. 

Nath said that India is likely to receive foreign direct investment of about $30 billion during 2008-09. The government had set a FDI target of $35 billion for the fiscal.

"I hope we will exceed $30 billion. I do believe that momentum will continue. This year there will be growth...but may not be huge," he said.

Total FDI during April-December 2008 worked out to be $18.7 billion, he said, adding it was double compared with the same period last year.

Asked about his expectations from the RBI in its quarterly review of the credit policy scheduled later this month, Nath said, "There is room for greater liquidity. RBI will certainly consider this and devise commensurate policy for injection of liquidity into the economy".

Asked whether declining inflation will have an impact on interest rate, he said, 'falling inflation obviously leads to that.'

Noting that the RBI policy in the past few months had led to greater injection of liquidity, he said, "It is now being reflected in greater comfort level of industry. . .some of the sectors have started showing upturn."

Inflation has come down to 5.24 per cent in January from the peak of 12.91 per cent in August last, raising hopes for further cut in the key policy ratios and rates in the forthcoming review of the credit policy.

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