Stimulus to ensure 7% economic growth: Montek

The government appeared confident that the stimulus package would ensure an economic growth rate of 7 per cent, as the across the board 4 per cent excise duty cut, additional expenditure of Rs 20,000 crore and measures taken by the Reserve Bank of India would boost demand for industrial goods.

"Seven per cent growth rate is quite feasible.... Seven per cent would be a good performance," Planning Commission Deputy Chairman Montek Singh Ahluwalia today said, while announcing the stimulus package here.

Indian economy grew by 9 per cent in 2007-08 and, according to estimates of various think tanks and RBI, is estimated to slowdown in the current fiscal mainly on account of the fallout of the global financial meltdown which has pushed economies of several developed nations into recession.

The stimulus package, which was approved by Prime Minister Manmohan Singh, is aimed at boosting the growth by cutting taxes, increasing public expenditure and ensuring flow of credit to infrastructure, construction and housing sectors.

"The package will minimise the impact of weak global economy on the Indian economy," Ahluwalia said, adding that the government will constantly monitor the situation and would come out with more steps if necessary.

The Reserve Bank, he added, has already taken a serious of monetary measures to ease credit flow and reduce cost of credit to several sectors of the economy, including housing, small and medium enterprises and exports, which are reeling under the impact of the slowdown.

The government, he added, will also prompt the public sector enterprises to clear the dues to small and medium enterprises to ease credit crunch being faced by them.