India announced an extra $4bn economic stimulus package on Sunday as it stepped up efforts to counteract shrinking growth. The latest measures bring to $60bn the amount in new government spending pledged in order to help the export, property and infrastructure sectors. But business leaders were quick to declare government efforts too modest and call for more aggressive public spending to spare Asia’s third largest economy a sharper slowdown. However, with a budget deficit projected to exceed 8% of GDP for the year to end-March 2009, the government has little room to stimulate the economy, say some economists. The announcement of the latest package followed the Reserve Bank of India’s move to slash the key repo interest rate by 100bp to 6.5%. However, business leaders and analysts said the 100bp cut to the repo rate and reverse repo rate, used to absorb cash from the market, were insufficient to lift growth and ease lending.

This entry was posted by Gwen Robinson on Monday, December 8th, 2008 at 5:44 and is filed under Capital markets. Edit this entry.