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India Unveils Economic Stimulus Plan

India has slashed interest rates and unveiled its second economic stimulus package in less than a month, in a bid to boost growth and stave off the effects of the global economic crisis.

The new stimulus plan eases limits on foreign investment in certain Indian companies, including real estate and infrastructure. It also allows state governments to borrow up to $6 billion to fund infrastructure projects.

To free up credit, India's central bank Friday cut its cash reserve ratio by half a percentage point, to five percent. That is the amount of cash banks must keep in reserve, and officials say the cut should inject $4.1 billion into the domestic banking system.

The central bank also cut two key interest rates by one percentage point.

It dropped the repurchase rate - the rate at which it makes short-term loans to commercial banks - to 2.5 percent, and the reverse repurchase rate - the rate at which it borrows from commercial banks - to four percent.

It is India's fourth interest rate cut since October.

National planning official Montek Singh Ahluwalia told reporters he hopes the Indian economy will grow by seven percent this year.

Some information for this report was provided by AFP, AP and Bloomberg.