The government is likely to announce a second stimulus package later on Friday to help shore up an economy slowing faster than many economists had expected, two officials in the Prime Minister's Office said.
One official, who did not want to be identified, told Reuters that Montek Singh Ahluwalia, deputy head of Planning Commission, would hold a news conference at 6:00 pm to announce details of the package.
In December, Indian authorities cut policy rates, announced $4 billion in extra spending and rolled out a four-percentage point cut in factory gate duties to help lift growth trimmed by the global financial crisis and high borrowing costs at home.
Last month, Trade Minister Kamal Nath said the government was looking at liquidity issues, and more steps to help exporters, the real estate and infrastructure sectors as part of a second package. - Reuters
The Article appeared in Associated Press this Sunday.
“Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the PrincetonUniversity professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."
Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."
Facing massive job losses, the White House and congressional Democrats are negotiating a deal to provide about $15 billion in loans to prevent the weakened U.S. auto industry from collapsing.
But the deal fails to happen.
Yesterday The Bush administration’s $14 billion automaker bailout plan and other alternatives lack the votes to pass the Senate, as lawmakers seek to beat a deadline to keep General Motors Corp. and Chrysler LLC from collapsing.
GM and Chrysler are in a race against the clock as they need federal aid to keep from running out of cash early next year. Pressure is mounting on GM as a small number of parts makers ask for payments in advance, people familiar with the matter said.
Effect -
Yesterday US markets tumbled. Asia opened weak and went down drastically. But Indian markets out perform the other Asian Markets.
Europe has opened weak, with GM stock opening at a 50% lower price than the last trade.
First it was believed that the effect would be short lived but the effect won’t get over fast as the conditions so prevail.
Video –
Martin Feldstein opposes the automaker bailout.
Video: Harvard economist Martin Feldstein says a managed bankruptcy is preferable to the current bailout proposal.
With economies from the U.S. to Japan in recession , the 2.8 billion people in Brazil, Russia, India and China may provide the consumer demand needed to counter the slump.
I totally agree as China got a Bailout package of 4 trillion yuan ($586 billion).
India's Inflation is cooling.
These factors can lead to more consumer spendings.
Markets turn out to be bullish with strong global cues. China announced a stimulus package to boost growth. Metals, power and capital goods stocks were the major gainers in today’s upmove. All the sectoral indices ended in the green. BSE Metal Index surged 11.04 per cent, BSE Power Index climbed 8.36 per cent, BSE Oil&gas Index moved 6.28 per cent higher.
Sterlite Industries, up 14.16 per cent, was the standout performer in Monday’s trade. Tata Steel (12.78%), Tata Power (11.89%), Reliance Infrastructure (11.29%), Bharti Airtel (10.85%) and Hindalco Industries (9.76%) posted significant gains.
Among frontline stocks, ITC (-1.54%) and Maruti Suzuki (-0.6%) ended with losses.
Market breadth on BSE showed 1692 advances against 856 declines. More readings ET.
Reeling under the liquidity pressure, the mutual fund industry could see more bailout deals -- similar to the takeover of Lotus India Asset Management -- in the coming days, say industry experts. "One or two more such kind of transactions may be seen in days ahead but that will mainly be for bailing out some problem-ridden fund houses," MF tracking firm Value Research CEO Dhirendra Kumar said. Value Research chief Kumar said, "The outlook for the mutual funds industry remains grim for the next two years and fixed income plans would come under pressure. The days ahead will also see mutual funds reinventing themselves to be more focussed on retail investors." Mutual fund industry has been under pressure for last two quarters and both the Reserve Bank and the Finance Ministry are ceased of the liquidity problem faced by the industry.
In order to provide liquidity to the cash-starved industry RBI last month opened a special repo window for the banks aggregating Rs 20,000 crore for on-lending to the industry.
The lackluster response from banks to pick up funds from this window forced the RBI to extend the window the limit is exhausted. Further reading Economic Times. Mergers and Accuasion
