Plan panel,EAC agree on need for 3rd stimulus

The coming Budget of the UPA government,which is to be sworn in soon,has generated a lot of expectations,with outgoing members....

The coming Budget of the UPA government,which is to be sworn in soon,has generated a lot of expectations,with outgoing members of the Planning Commission as well as Prime Minister Manmohan Singhs Economic Advisory Council asserting that there is a firm case for a third stimulus.

Abhijit Sen,the commission member who was looking after finance,made a strong case for another stimulus package enabling increased expenditure from the Centre and the states. The interim budget did not address the issue of increased expenditure. Since the fiscal deficit is likely to be large,there is a clear case for a stimulus package. So,the government might have to do some tightrope walking between expenditure and allocations, the outgoing member pointed out.

He said that with the Left parties out of the government,the new UPA administration could initiate financial reforms full throttle. But a call needs to be taken on this issue as this is perhaps not the right time for huge liberalisation, Sen argued and pointed out that the issue of vexed labour laws could now be handled,as the UPA government would have the strength of numbers with it in the Parliament to carry out any legislative changes on the matter. However,he made it clear that there may not be fresh incentives to the states to enable them to borrow more as the Centre may resort to serious fiscal discipline.

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Another outgoing plan panel member,Anwarul Hoda,who was in charge of the infrastructure sector,also emphasised on the need for another stimulus package in the coming Budget which should be devoted to upgrading road network,irrigation,etc. Hoda said the stimulus package was needed to rejuvenate depressed sentiments and infuse a fresh lease of life in re-building of roads and highways. On the industry front,he said issues pertaining to infrastructure,taxation,labour,skill development and entry barriers would have to be sorted out to fasten the pace of industrialisation.

Similarly,a senior official of the Economic Advisory Council too echoed similar sentiments and pointed out that more monetary and fiscal measures were needed to bail the economy out of the slowdown as the measures implemented so far have not delivered mush results.