CII asks for more fiscal and monetary steps

Amid anticipation of a second stimulus package to spur economic growth, industry body CII has asked for a reduction in key policy rates, export sops and increased investment in infrastructure.

CII has given a wish-list to the government, the central bank and the market regulator Sebi for consideration before the stimulus package is announced.

The industry body has said the package should contain monetary measures like reduction in repo and reverse repo rates by 100 basis points.

"Looking at the increasing requirements of domestic liquidity, the need to stimulate demand and the downward trend in inflation... RBI could further reduce the repo rate by another 100 basis points to 5.5 per cent, and commensurately slash reverse repo by another 100 basis points to 4 per cent," it said.

It has also suggested a refinance window for commercial vehicles sector and relaxation of provisioning norms for commercial vehicles and the micro, small and medium enterprises.

On the fiscal side, CII want increase in duty drawback rates and reduction in interest rates on export credit for the textiles sector, which has warned of large scale layoffs in the coming months.

On December 7, the government had announced a four per cent cut in excise duty across the board and raised the public expenditure by Rs 20,000 crore in the first stimulus package to counter the impact of the global meltdown.

The Reserve Bank on its part had injected around Rs 3,00,000 crore liquidity into the system through a series of cuts in key policy rates and other measures. Subsequently several banks have lowered their lending rates.