Continue fiscal stimulus, Manmohan Singh tells world economies

London, Apr 1 (PTI) Indian Prime Minister Manmohan Singh
has urged the world economies to continue with stimulus
packages till 2010 and avoid all kinds of protectionism
including in the financial sector to battle the global
economic slowdown.

When asked about India's stand on fiscal stimulus, Singh
told the Financial Times in an interview: "I've seen a letter
from the managing director of the IMF saying that the stimulus
that has been planned in the year 2009 by major economies
amounts to 2 per cent of (world) GDP.

"This is probably adequate but it's necessary to ensure
that stimulus is sustained and maintained in the year 2010."

Singh, who is here to attend the second meeting of the
leaders of the G-20 in about a month, said, "Protectionism has
to be avoided -- protectionism not only on the goods but also
in the area of services. Financial protectionism is also bad
and should be avoided."

"Some action by the developed countries particularly the
withdrawal of capital resources from the developing countries
by the banks of the developed countries is equally worrisome.

"We have entirely agreed that protectionism of all sorts
including financial protectionism has to be avoided. Although
some countries have taken action, in practice the impact of
what has been done has not been reversed," he added.

Singh said India's fiscal stimulus for the time being is
"adequate". "With the decline of inflation there is added
manoeuvrability in the use of monetary policy which will be
utilised when and where it becomes necessary," he added.

"Our growth rate has been affected; we were having a
growth rate of 9 per cent until 2007/8, (from when) the growth
rate has come down to 7 per cent and maybe lower than that,"
he said.

"We have taken measures. Our fiscal deficit has gone up
substantially. We have deliberately allowed it to go up to
provide stimulus as a substitute for the decline of exports,
for the decline of international capital," Singh said.

Asked whether his coalition government was a constraint
in bringing in more reforms, Singh said: "You would have liked
to push through more reforms. The coalition has its own
compulsions."

"It is certainly true that we would have liked to move
faster on some elements on the (economic) reforms but politics
is the art of the possible," he added.

Singh further said resolving the current global financial
crisis needs a long time. "Beyond a point they are issues
relating to the redistribution of powers among nations. I
don't think these are issues that can be resolved in a short
period of time," Singh said. (MORE) PTI