New Delhi: With a slew of measures to help a slowing economy and win over voters, the Congress-led United Progressive Alliance (UPA) government extended Rs325 crore of help to exporters in employment-intensive industries, promised a further cut in fuel prices, raised spending on urban development, increased entitlements to protect government employees against an increase in the cost of living and offered subsidies to build one million homes across the country.
Click here to watch video
The export sops were extended in the interim trade policy announced on Thursday by commerce and industry minister Kamal Nath while the other decisions were taken by the cabinet committee on economic affairs (CCEA).
The government also announced a politically sensitive policy of modernizing slaughter houses in the country to help commercial processing of meat to facilitate bovine exports from India.
CCEA also announced a Rs3,070 crore revival package to wipe out the accumulated losses of all primary cooperative agriculture and rural development banks, and state co-operative agriculture and rural development banks. Losses on agricultural credit will be borne by the Central government while losses from non-agricultural business will be shared by the state governments and the cooperatives concerned.
Offering hope: Petroleum and natural gas minister Murli Deora. Gurinder Osan / AP
“The cabinet committee is yet to decide on the diesel price cut. It is for the party and the government to decide. I personally feel that there is a scope to reduce diesel prices. We will try again tomorrow,” Murli Deora, petroleum and natural gas minister told Mint.
The government is betting that the step-up in spending on urban development programmes and housing will stimulate construction activity.
CCEA increased the outlay for the Centrally-sponsored Rs50,000 crore Jawaharlal Nehru National Urban Renewal Mission (JNNURM) by more than one-fifth, to Rs61,000 crore. Of this, Rs6,000 crore will go to the Urban Infrastructure and Governance, part of JNNURM, which provides grants to 63 large cities and Rs5,000 crore will go to a scheme that administers grants for some 5,098 small towns. Earlier, Rs24,000 crore had been earmarked for the large cities and Rs7,000 crore for the small towns.
“Roughly about 60% of urban population is in small towns, where infrastructure is weaker. Relatively, there is much higher need in these small towns. So, this will be a relief,” said S.R. Ramanujam, director (urban practice) at Crisil Risk and Infrastructure Solutions Ltd.
The government also allocated Rs5,000 crore for the next four years to encourage state governments to increase the supply of land for the development of townships, which will set aside space for the construction of 1 million affordable houses. The housing projects would be developed as public-private partnerships; in addition, the Central government will also share costs on developing infrastructure for these projects.
However, private developers were sceptical.
“Land is a subject of the state government and unless state governments decided to release land, nothing can be done,” Rohtas Goel, chairman and managing director of developer Omaxe Ltd and president of National Real Estate Development Council, said.
“However, if some scheme comes though, it is welcome and it will be a good initiative by the government,” Goel said, while stating that his company would be interested in participating in such a project.
The government also raised dearness allowance for Central government employees and pensioners by 6% from 1 April, which will cost the exchequer another Rs6,000 crore. It also approved a special programme for upgrading highways in 33 Naxalite-affected districts in eight states, at a cost of Rs7,300 crore. The upgrade of two highways connecting Jammu with Srinagar was also approved at a cost of Rs8,436 crore.
The Centre also approved a scheme to modernize abattoirs in the country. Viable projects for modernization of slaughter houses proposed by local authorities as well as private investors will be considered for assistance, with a ceiling of Rs15 crore per abattoir.
The Bharatiya Janata Party (BJP), the main Opposition party, questioned the government’s move.
“Just before elections, they have suddenly remembered these slaughter houses, whose modernization is a very old proposal. This is merely an election strategy to woo a certain section of voters,” Mukhtar Abbas Naqvi, BJP vice-president, said.
Meanwhile, the interim trade policy—a full trade policy will be announced by a new government—announced a Rs325 crore export incentive package for the leather and textiles sectors, both of which have been seen layoffs following contraction in global demand.
Announcing the measures, Nath also lowered the export growth target for 2008-09 to $175 billion (Rs8.8 trillion) from the earlier target of $200 billion.
The government has also made it easier for exporters to claim refunds, under the Duty Entitlement Pass Book scheme, on the domestic levies paid by them on inputs.
Rahul Chandran, Asit Ranjan Mishra, Shabana Hussain and Ruhi Tewari contributed to this story.
Video by Rahul Sharma