The second stimulus package announced by the government is on right direction but falls short of ASSOCHAM expectations as it had anticipated the size of package running into Rs.1 lakh crore as against Rs.20,000 crore to support infrastructure and its social security schemes.
According to ASSOCHAM Secretary General, Mr. D S Rawat, an across the board cut of 4% in ad-valorem CENVAT rate as well as removal of ceiling of ECB and extension of DEPB scheme are welcome measures.
Mr. Rawat appreciated the RBI’s decision to reduce CRR and reverse repo rate (RRR) by 50 and 100 basis points respectively, hoping that it will definitely provide some relief to industry in regaining its confidence and buoyancy.
However, the CRR reduction should also have been on par with reverse repo rate, said Mr. Rawat adding that SLR should also be brought down to 20% from existing 24%. The ASSOCHAM hoped that in subsequent packages of RBI, the premier bank will gradually rationalize CRR, RR, RRR at 2004 levels to enable individuals and corporates to access liquidity at moderate interest rates.
Source: ASSOCHAM
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