National

Rs. 1 lakh crore-investments will be committed in 100 days: Ashwani Kumar

CHENNAI: To “rev up economic activity” urgently, investments of about Rs. 1 lakh crore will be committed in the coming 100 days, Minister of State for Industrial Policy and Promotion Ashwani Kumar said on Friday. This is part of the fiscal stimulus packages announced by the government.

Outlining the government’s strategy to combat the global economic downturn, Mr. Kumar, in an interview here, said investments would be unleashed in road development, irrigation, power and urban transport.

Investments in the construction industry, which is served by 42 other industrial sectors including cement, steel, wood and rubber, would ensure that “blue-collar jobs in these segments are not lost,” he said. The construction industry accounted for the employment of 32 million people. In effect, the government aimed at preventing job loss and ensuring economic security. “Every stimulus package intends to raise the morale and mood of the country.”

To boost the decreasing demand in the auto sector, which has been “India’s success story,” the State governments would be given a 90 per cent grant to acquire 40,000 commercial vehicles, he said.

By managing the repo rate and the reverse repo rate, more funds were being infused into the system. The Reserve Bank of India and the Finance Ministry also had mechanisms to ensure that banks did not profiteer. Emphasising the need for liquidity, he said, “We need to ensure that capital is made available to bankable projects at affordable interest rates.”

The investments would be funded using deficit financing. Though fiscal deficit needed to be under control as a prudent economic proposition, “an extraordinary situation calls for an extraordinary response.”

Pointing out that government spending was an important element in reviving confidence, Mr. Kumar said once economic activity reached acceptable levels, the deficit would be taken care of.

“The sequence of policy announcements demonstrates a calibrated and well thought-out programme of financial stimulus to the economy.” It would take five to six months to see the effect of the current measures.

Commenting on the impact of the Mumbai terror attacks on the economy, Mr. Kumar said, “Any conflict situation does not augur well for the economy.” Hence, the first priority was to consolidate peace and economic growth.

“India is a peace-loving country and has never preferred conflict as a solution.” However, he said, the Indian state had the requisite will and power to defend itself against attacks on its sovereignty and integrity.

Mr. Kumar said the role of Pakistan in the Mumbai attacks was convincingly established by India through vigorous diplomatic initiatives. Pakistani authorities were forced to admit that one of the terrorists in India’s custody had Pakistan nationality.

“The needle of suspicion has a clear pointer,” he said. It was therefore legitimate to expect a “credible and non-negotiable assurance” from Pakistan that those guilty would be handed over to India.

Pointing out that “we have to recognise that the entire world is vulnerable to insane acts of terror,” Mr. Kumar said there was “no escape from an environment of insecurity which necessarily must invite purposive response as the one shown by the UPA government in the immediate aftermath of the Mumbai attacks.”

Commenting on the measures adopted, he said: “Any legislative measure can at best be only punitive in the sense of bringing to justice perpetrators of terror and is not preventive in nature. Also, an oppressive law or an aggressively applied law only feeds and fuels terrorism. This is the inescapable lesson of our fight against terrorism.”

© Copyright 2000 - 2009 The Hindu