India unveils second economic stimulus plan

NEW DELHI, (AFP)

India Friday eased foreign borrowing for real estate and certain other companies and allowed additional liquidity for non-banking financial firms to boost growth in Asia’s third-largest economy.

The second economic stimulus package in less than a month came as India forecast growth of seven percent for the year to March 2009, but economists say it could be as low as 6.8 percent this year and 5.5 percent the following year.

The package also allowed state administrations to borrow up to 300 billion rupees (6.2 billion dollars) to meet additional expenditure and fund infrastructure projects.

In a bid to bring in more foreign capital, the government said it would liberalise rules on overseas borrowing by property firms and those dealing with infrastructure projects such as airports, power and highways.

The ceiling for foreign investments in corporate bonds would be raised from six billion dollars to 15 billion dollars, national planning official Montek Singh Aluwalia told a news conference.

But he warned against expecting any immediate economic turnaround.

“The latest assessment we have is that we should be willing to see growth rates decline in the coming year and an average growth rate of seven percent would be quite a good performance,” he said.