Stimulus Package – Stimulus Package is announced at the time of downturn of the economy. Government of the country increases its expenditures and the Central Bank of that country announces the interest rate cuts to increase the demand in the market, therefore balancing the demand and supply equilibrium of the economy.
In India the first stimulus package worth $4 billion was announced by the Indian government in December 2008 to shield its economy from recession. A number of incentives have been announced in economic stimulus package of India. Incentive schemes worth total of $70 million have been allocated to boost exports. Medium and small businesses are being provided tax exemptions and tax holidays.
Value added tax has been cut at different levels and across products to increase spending i.e CENVAT reduced by 4%, has brought down the prices of cement, textiles and cars.
A 10-point stimulus package by Indian government had announced to provide cushion to the most badly affected industry sectors i.e. small & medium industries, housing, power, Infrastructure and automobiles. It was announced that this stimulus package will force manufacturers to operate in a most competitive environment and pass this tax benefit to the end users and in return this will infuse the demand in the market. These have been drawn up by government to infuse a sense of optimism in minds of investors and industrialists.
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