NEW DELHI: India is considering a package of stimulus measures to boost exports, encourage domestic investment, support small and medium enterprises and provide more money for rural infrastructure and affordable housing but policymakers are not keen on relaxing fiscal deficit targets to accommodate this extra spending . Concessional credit to small and medium enterprises, incentives for exports that have grown moderately even as global export growth has picked up and more funds for railways are some of the measures on the cards.The costs of fiscal relaxation outweigh benefits in terms of risks to macroeconomic balances that were achieved with much effort, feel officials, so the attempt will be to look for savings and other non-tax resources to fund the extra spending.Speculation about the government going in for a fiscal deficit relaxation led to a fall in the rupee and an increase in bond yields, with talk of a Rs 40,000-50,000 crore stimulus. The rupee sank as much as 0.9%, the most since May 18, to 64.84 per dollar, before closing at 64.79. The yield on the benchmark 6.79% bonds due in 2027 surged 10 bps to 6.68%, its highest close since May 24. It was also the biggest daily increase in yield since the securities were issued mid-May.Finance minister Arun Jaitley signalled that measures to revive growth, which slumped to a three-year low in the June quarter, were imminent. “There is problem of private investment. Government is seized of the issue. Very soon you will hear from us,” Jaitley said at a JPMorgan investor summit in the Capital.“From day one, this is a proactive government. We are analysing the economic indicators and appropriate action will be taken at the right time,” he was cited as saying in tweets by his ministry.Jaitley has been holding consultations with other ministers, officials and government advisers on measures to boost the economy after GDP growth slumped to 5.7% in the April-June period, triggering calls for measures to boost growth, capital investment and exports. The government is looking at bank capitalisation, big push to roads and railways and extending some support to the export sector, which could be in the form of higher interest rate subvention.The troubles of banks with non-performing loans has also contributed to the slowdown in capital investment with state run banks barely able to fund industry or infrastructure.“Banks have done excessive lending in the past. Proposal of capital adequacy of the banks is also on the table,” Jaitley said. The government has set aside Rs 10,000 crore for capitalising state-run banks.Gross fixed capital formation, a measure of capital investment, was up only 1.6% in the quarter, much of it on account of government spending on roads and other infrastructure. It rose 2.4% in FY17.Jaitley has said the stimulus measures will be announced after consultations with Prime Minister Narendra Modi Finance ministry officials feel a fiscal stimulus at a time of rising inflation and higher current account deficit are risky measures that can also be perceived as a panic response. But all options are being examined, an official said.India’s fiscal deficit has already reached 92% of the budget estimate in the first four months of the financial year that began April 1, according to the Controller General of Accounts. The government has budgeted a fiscal deficit of 3.2% of GDP in the current fiscal that is to be trimmed to 3% of GDP in the next fiscal, according to the consolidation roadmap.Within these constraints, the government will look to give more funds to banks as well to step up credit, while looking for more revenue to meet these funds. Generating more funds from disinvestment and getting more money from the Reserve Bank of India are also being explored.To be sure, the NK Singh panel report on the fiscal roadmap has provided for an escape clause on the deficit commitment in case of unforeseen events such as war, calamity, agricultural collapse, far-reaching structural reforms and a sharp decline in real output growth of at least 3 percentage points. It provides for a deviation in the fiscal deficit target of not more than 0.5 percentage point, but RBI governor Urijit Patel , a member of the panel, favoured a 0.3 percentage point deviation. The government, however, has to pledge a return to the roadmap after a year.Jaitley said he was personally in favour of a Universal Basic Income, an idea seen by many as an antidote to poverty. “Only fear is level of political maturity,” Jaitley said.Jaitley said the government is not averse to privatisation with regard to asset sales.“We have (an) ambitious target for divestment this year. Even today, we have (an) Air India divestment meeting,” Jaitley said, adding that disinvestment may have been slow earlier as the market was not conducive.“In the last few years, market was quite volatile at times, so the government has to wait for the right time for divestment,” he said.The government has set a record Rs 72,500-crore disinvestment target for the current fiscal, which is crucial to achieving the fiscal deficit target for the year.