Pranab not in favour of full stimulus exit for now

Pranab not in favour of full stimulus exit for now

India is not looking at complete rollback or a full exit of its fiscal stimulus for now, the Finance Minister, Mr Pranab Mukherjee, has said.

Addressing an interactive session with Chief Executive Officers and leaders of the business community from India and the US in Washington, on Monday, Mr Mukherjee said that he was not in favour of complete rollback and exit at this stage, because of the continuation of the international financial crisis.

The interactive session was organised by the Confederation of Indian Industry (CII) on the eve of the India-US Business CEOs Forum meeting on Tuesday.

Mr Mukherjee's latest remark (in Washington) on stimulus rollback is bound to provide comfort to Indian industry, which is opposed to full exit during the current fiscal. Indications are that the Government will not look at further stimulus rollback before February 2011.

In the aftermath of the global financial crisis, India had injected stimulus packages equivalent to 3 per cent of its GDP to shield its economy. The Finance Minister had, in Budget 2010-11, initiated partial rollback of stimulus packages.

Meanwhile, the Finance Minister said at the interactive session that there was a need for close cooperation with the US not only in finance and trade but also in other areas such as agriculture, insurance, health including clinical research and education, among others.

Yuan impact

Replying to a query on China's announcement to adopt a flexible policy on yuan, Mr Mukherjee welcomed the move and noted that it would not adversely impact the Indian economy. He expressed hope that China will follow a policy keeping in view the interest of the world economy.

Mr Mukherjee also addressed a gathering of senior executives from financial services firms at the Institute of International Finance.

Speaking on the occasion, Mr Mukherjee said that the flow of foreign direct investment (FDI) into India has not been “disturbed” despite the global financial crisis. He reiterated that India will achieve more than 8.5 per cent GDP growth during 2010-11, despite the continuing global economic crisis.

The Finance Minister identified fiscal consolidation, inflation control and oil prices as the three main challenges facing the Indian economy today.

source: https://www.thehindubusinessline.com/2010/06/23/stories/2010062353750400.htm