Economic stimulus should come with sunset clause: CII

Fearing that the mounting fiscal deficit could create problems in future, the Confederation of Indian Industry has suggested that stimulus measures to boost the economy should be accompanied by a 'sunset clause', the date on which they would be terminated.

". . .all stimulus measures should come with a sunset clause so that they are terminated once the economy and industry are out of the woods," CII said.

The chamber, however, made a strong case for providing stimulus to the economy in the upcoming Budget with a view to increasing capital expenditure.

The efforts, it added, should be made to raise expenditure without increasing the revenue deficit.

"For example, spending on large infrastructure projects is something that will stimulate the economy and the increase in spending will not be perpetuated," it said.

To prop up the slowing down economy, the government came out with three stimulus packages in December, January and in the Interim Budget, providing incentives to various sectors and cutting certain indirect taxes across-the-board.

These packages, which entailed either higher expenditure or sacrificing revenue, pushed up the fiscal deficit to over 6 per cent during 2008-09, as compared to 2.5 per cent initially estimated.

For the current financial year, fiscal deficit in the interim Budget was projected at 5.5 per cent, which may go up in the final Budget to be unveiled on July 6.