Centre looks at steps to push economy

New Delhi: Putting more money into the hands of consumers this festive season, easier loans to SMEs and expediting disinvestment are among the steps being considered as part of a stimulus package to dig the economy out of its deepest slump in three years, according to officials.

Also on the menu are measures to encourage domestic investments and provide more money for rural infrastructure and affordable housing, they said. Chief Economic Advisor Arvind Subramanian has been tasked with preparing details of the pressure points facing the economy and the probable remedies.

Finance Ministry officials said the government recognises that liquidity is a problem, but is undecided on easing the target of shrinking Budget deficit to 3.2% of gross domestic product (GDP) in the current fiscal from 3.5% the previous year.

Policymakers are aware that easing stress and giving consumers more money to spend is the need of the hour and that policies have to be put in place before the festive season. Private consumption demand is low and one of the suggestions before the government is to cut tax rates or increase threshold, they said adding these are only proposals and no view has been taken on them as yet.

With the lingering impact of demonetisation of 86% of currency in circulation and implementation of GST resulting in India losing its fastest-growing major economy tag as GDP growth slipped to a three- year low of 5.7% in the April-June quarter. Officials said, with limited resources and no windfall expected out of GST, the government is working on measures that will spur investment and create jobs.