Centre has more options for stimulus open, keeping a close watch on prices, say officials

NEW DELHI: The Centre will introduce further stimulus measures if needed, a top official said a day after the government announced a series of steps to boost the economy. The government is moving ahead with its economic agenda and will soon approach the cabinet regarding the establishment of a lender to fund infrastructure, apart from drafting the new public sector policy, the person said. Also on track is the Life Insurance Corporation (LIC) of India initial public offer plan, he said.

“The government has not closed the option for another stimulus,” the official said. The measures announced on Monday to boost consumption and capital expenditure are expected to provide a boost of as much as ₹1.1 lakh crore to the economy. Economists have said the impact of the measures may not be significant.

Apart from the LIC share sale, there is no change in the plan to divest the residual stake in IDBI Bank, which is scheduled for the current fiscal, the official added. The government owns a 46.5% stake in IDBI Bank after LIC acquired 51% stake in January 2019.


Keeping close watch on prices

The government is keeping a close watch on prices and a group of ministers meets regularly to examine the situation. The recent spike in food inflation was largely due to seasonality, the official said. The Vodafone retrospective tax arbitration ruling is under examination and the government is yet to take a call on whether to appeal against the decision or not.

The proposed finance institution will handle long-term infrastructure financing. “We are close to getting it to the cabinet,” the official said. Banks have been funding infrastructure after development financing institutions folded up but that’s led to asset-liability mismatches, spurring the demand for a new lending institution.

The new public sector policy will determine those industry segments that will be considered strategic, thus determining whether state-owned enterprises should be present in them. Under the policy, a list of strategic sectors will be notified. There will be at least one and a maximum of four public sector enterprises in such segments, apart from private sector companies.

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