Govt. announces Rs.20,000 crore economic stimulus package, India Inc. wants more

Additionally, the government said it would provide an extra Rs.1400 crore for modernizing the textile industry, through a technology upgrade funding scheme.

To boost corporate borrowings and real estate sector, the government also promised that banks would be provided guarantee for extending collateral-free loans up to Rs.1 crore to small firms and state-run banks would announce package for borrowers of home loans up to Rs.20 lakhs.

"The government is keeping a close watch on the evolving economic situation and will not hesitate to take any additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity," it said in a statement.

The economic stimulus package allows India to join global peers in pumping cash as credit markets freeze though Sunday's announcement falls far short of neighboring China's $586 billion package unveiled in November.

Responding to the government's move, India's industry chambers said the economic stimulus package was good but not enough.

"We were anticipating a package of Rs.70,000 crore. A few sectors such as steel, cement, construction and real estate need boost from the government," said Sajjan Jindal, president of Associated Chambers of Commerce and Industry of India (ASSOCHAM). The industry lobby is expecting another package of around Rs.30,000 crore in January.