FM says stimulus to stay, though RBI begins exit

LD FM

New Delhi, Nov 3(PTI) The government of India Tuesday
said inflation is not an immediate concern and will continue
with the fiscal stimulus measures till the economy recovers
fully.

"For the present, I maintain that the fiscal stimulus
will have to continue, to allow its impact to fully through
the economy...," Indian Finance Minister Pranab Mukherjee said
at the Economic Editors Conference here.
Mukherjee's assertion to continue with fiscal stimulus
comes within days of the Reserve Bank starting the first phase
of exit from accommodative monetary stance on October 27 by
raising the amount of money that banks have to keep in gold,
cash and government bonds by one per cent age points.
Mukherjee, however, said that it was imperative to return
to fiscal discipline "as soon as the current economic
circumstances permit us to do so".
He said the government is "looking quite closely" at
steps to cut non-Plan expenditure, especially subsidies on
fertiliser and petroleum products. The fertiliser subsidy
alone is projected to be Rs 55,000 crore for this fiscal.
Mobilisation of additional resources through disinvestment
should also help the government consolidate its finances as
the fiscal deficit started shooting up for 2008-09 and for
2009-10 under the impact of a series of stimulus packages.
Though inflation has started moving up and according
to RBI estimates it may touch 6.5 per cent by March-end.
Mukherjee said "there is no dearth of liquidity in the economy
and inflation as yet is not a pressing area of concern". PTI
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