India moves to protect economic growth

The Indian government revealed yesterday that it would seek to increase spending to the tune of 200 billion rupees, thanks to a series of measures including cutting taxes on several products as well as increasing the growth in home loans and allowing a state firms to issue tax-free bonds worth 100 billion rupees in order to finance infrastructure projects and get the economy going again.

The government is keeping a close eye on the economic situation and are ready to take any necessary action in order to maintain economic activity.

Many analysts however has indicated that Indian Prime Minister Manmohan Singh’s spending plan and interest rate cuts may not be enough to prevent a slump in economic growth as it is predicted to slow to a six year low by 2009.

The pump in spending is set to stand at 0.3 percent of the gross domestic product, although the government has announced that they will not break their monetary policy.

It is hoped that the lower interest rates will mean Indian companies will be applying for loans to domestic banks rather than US lenders which should get the rupee flowing again.

Following the news over the weekend Indian stocks and the rupee rose to a three-week high.

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