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Monetary, fiscal doses in next tonic

New Delhi, Dec. 24: The government’s second stimulus package could raise the interest subsidy on textiles to 4 per cent from 2 per cent and impose an anti-dumping duty on chemicals, steel and non-ferrous metals such as aluminium.

As part of a co-ordinated strategy, the RBI is likely to cut the repo and reverse repo rates, which will make it easier for banks to give home loans at a cheaper rate. Repo and reverse repo are short-term RBI loan and borrowing, respectively, vis-à-vis banks.

Sources said the central bank might raise the limit for priority sector home loan to Rs 30 lakh from Rs 20 lakh in the four metros — Delhi, Mumbai, Chennai and Calcutta.

“We are looking at financial, some liquidity issues, export and something to stimulate demand, and realty also,” commerce minister Kamal Nath said.

The minister did not rule out cuts in excise duties on some goods to encourage demand.

Planning Commission deputy chairman Montek Singh Ahluwalia, cabinet secretary K.M. Chandrasekhar and Nath are fine-tuning the package, which is likely to be announced this week itself.

The sources said the government was expected to come out with a Rs 350-crore package for exporters. From the funds, exporters will get export credit insurance over and above the protection given by the Export Credit Guarantee Corporation.

As a safeguard against unfair competition from China and the Commonwealth of Independent States, the government is mulling anti-dumping duties on some items.

On the cards are greater duty drawbacks, or refunds, and benefits under the duty entitlement passbook scheme.

In its mid-year economic review, the government yesterday said it was prepared for a 7 per cent growth in 2008-09, much less than the 9 per cent growth of 2007-08.

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