The slight rise in credit to industry by banks in the fortnight ending December 5, reversing a sustained decline through November, has given government managers the hope of a revival in the industrial sector. According to RBI data, non-food credit to industry has turned positive at Rs 7,560 crore for the fortnight ended December 5 after turning to a negative of Rs 9 crore in the previous fortnight. The government plans to announce another stimulus package this week on top of the Rs 1,50,000 crore announced so far through two supplementary budgets in rapid succession in October and last week. Prime Minister Manmohan Singh met top finance ministry officials, including the finance secretary Arun Ramanathan, RBI governor D Subbarao and economist C Rangarjan on Saturday to discuss the specifics of another package. But key policy adviser Suresh Tendulkar told FE the headroom for additional spend was limited. The government will have to walk a tightrope and will have to tailor the stimulus package according to its fiscal constraints, he said. Tendulkar is chairman of the PM s Economic Advisory Council. Total expenditure for the fiscal is already at Rs 9,00,000 crore, which means the fiscal deficit is way above the government s target of 2.5% of GDP. The government is, therefore, considering a cut in key interest rates like in reverse repo, the rate at which banks park their additional funds with RBI. It is currently at 5%. While leading financial entities like HDFC and SBI (SBIN.NS : 1287.45 0) cut rates by up to 75 basis points, Singh s team expects the rates to ease even more with more cuts from RBI. As the rate of creation of money in the financial system has declined to 10.4% in this fiscal against 11.2% in the same period last year and the inflation rate has eased below RBI s comfort zone of 7% to 6.84%, there is headroom here unlike the fiscal space. Industry chambers like the Confederation of Indian Industries said on Sunday the government should cut both repo and reverse repo rates by 100 basis points. The fiscal package, according to the chamber, should include a special refinance window for the commercial vehicles sector, an increase in the duty drawback rate and a reduction in interest on the export credit for textile sector. It sought a deferment of the excise duty payment by sectors under stress as well as a push to low-cost housing. It has also asked that the government set up a National Infrastructure Stimulus Fund to facilitate projects in the sector. To counter the impact of the turmoil in global financial markets, the government on December 7 had announced the stimulus package aimed at sectors such as steel, automobile, exports and textiles. It also announced a 4% cut on central excise duty to spur demand, and hiked its annual plan spend by Rs 20,000 crore. The Reserve Bank on its part has already injected around Rs 3,00,000 crore liquidity into the system through a series of cuts in key policy rates and other measures. Many banks have followed suit and lowered their lending rates. With the downturn in the economy, the country s industrial output slipped by 0.4% in October and is likely to worsen in November, although official figures are yet to be released. Export data for last month revealed that the country s total exports declined by 10%. Faced by slackening demand and falling prices, most companies have asked for further relief measures.