Seeking to calm the industry frustrated with stimulus packages, showing no signs of improvement in the real economy, the government on Saturday said measures take some time to reflect on the ground. The government also said the impending general elections are not going to prevent it from processing new policy initiatives.
?There is a time lag between announcement and implementation. Let us realise that implementation of decision take months. Steps have been taken. We hope the impact would be felt later, if not today,? T K A Nair, principle secretary to the Prime Minister, said here.
Since December 7, 2008, the government has announced three stimulus packages to kickstart the slowing economy. It has increased public expenditure on infrastructure, in addition to cutting duties and taxes to boost the industrial production and demand in the economy. However, as per the latest figures, factory output came down 2% in December 2008 year on year. Production in infrastructure sectors, which account for 27% of industrial output, has also shown negative growth of 1.4% in January 2009. Exports have dropped 16% during the month.
On the increasing fiscal deficit to estimated 6% of gross domestic product during the current financial year, Nair said people have diverse opinion about the deficit financing. ?Although the government has given thousands of lack of rupees, some people say the amount announced in the packages is not enough. At the same time, some say it (deficit financing) is not the right way to do it (boost demand). Be as it may, effect of the slowdown has been felt,? he said.
In order to face this effect, Nair said, all the viable recommendations would be processed despite the election code of conduce being in operation. ?Processing of recommendations is not going to be impacted by elections. Although the decisions and their implementation may be delayed,? he said.
Referring to the suggestions made by National Commission for Enterprises in Unorganised Sector, he said the viable recommendations would be operationlised. The commission had in December submitted to Prime Minister a 10-point agenda, which included introduction of urban employment guarantee programme on the lines of National Rural Employment Guarantee Programme with a financial support of Rs 14,400 crore.