India announces economic stimulus to boost demand for $ 10 billion

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By Aftab Ahmed and Manoj Kumar

NEW DELHI, Oct.12 (Reuters) – India on Monday announced measures to boost consumer demand, including the prepayment of part of federal government employee salaries during festival season and more capital spending as it tries to support the economy stricken by the pandemic.

The government will allow its employees to spend tax-free travel allowances on goods and services, Nirmala Sitharaman, India’s finance minister, said at a press briefing.

She said the government would also support investments by spending an additional 250 billion rupees ($ 3.41 billion) on roads, ports and defense projects, and offering 120 billion rupees in interest-free loans. 50 years to state governments for infrastructure spending before March 31. , 2021.

“All of these measures are likely to create an additional demand of 730 billion rupees ($ 9.96 billion),” Sitharaman said, adding that the proposals would stimulate demand in a “fiscally prudent manner.”

Prime Minister Narendra Modi’s government, which imposed a tough lockdown to stem the spread of the coronavirus in March, is moving forward with a full opening to try and boost the economy ahead of the festival season, which typically takes place in ‘October to March. .

The latest package would not require any additional borrowing from the federal government, Tarun Bajaj, secretary of economic affairs at the finance ministry, told reporters.

India’s federal government said last month it would stick to the revised borrowing target of 12 trillion rupees ($ 163.78 billion) for the current fiscal year ending in March, up from a earlier estimate of 7.8 trillion rupees. the total number of coronavirus cases topped 7.12 million, just behind the United States, with deaths reaching 109,150.

the Reserve Bank of India left key rates unchanged on Friday, while maintaining an accommodative monetary stance to support an economy that is expected to contract by nearly 10% in the current fiscal year. = 73.2670 Indian rupees)

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