Since The Union Government has announced the second fiscal stimulus package on Friday to sustain the adequate growth rate. It contains measures to provide credit at low interest rates, higher public spending and easing liquidity and export import related concessions to propel the economic growth and mitigate the impact of global slowdown. The Reserve Bank has also announced key interest rate revision as a part of this fiscal package.

Public sector banks are provided with additional Rs 20,000 crore over the next two years. Government has also relaxed the interest ceiling on external commercial borrowing to $15 billions from the existing $6 billion to increase availability of credit. Norms are also relaxed to purchase commercial vehicles. Indian Infrastructure Finance Company can raise an additional Rs 30,000 crore by means of tax-free bonds. Norms related to the borrowing by states from the market are also eased to increase public spending.

Planning Commission Deputy Chairman, Montek Singh Ahluwalia said that the ongoing financial crisis would impact the Indian economy. He added, "By no measures can we insulate our economy from slower growth, when the external factors are of such enormous magnitude. However, we will be able to manage a 7% growth this fiscal through these measures." He warned that the slowdown may become grimmer next year.

The country is unlikely to achieve the budgeted target for the fiscal deficit due to the economic slowdown. Commenting on the deficit, Planning Commission Chairman said, "Considering the implementation of the Sixth Pay Commission, the consensus within the government was a fiscal deficit of 3%. The mid-term review of the economy said that the fiscal deficit would be over 5%, excluding the below-the-line items such as fertilizer and oil subsidy. If we include these items, the fiscal deficit could exceed by 3% of the gross domestic product, what was being targeted."