Stimulus to continue for some more time, says Pranab

New Delhi, Nov 10 (PTI) Finance Minister of India Pranab
Mukherjee Tuesday said the fiscal stimulus will have to
continue to generate domestic demand till there is a robust
recovery in the global economy.

Mukherjee's remarks at the India Economic Summit came two
days after Prime Minister Manmohan Singh announced from the
same podium that fiscal support would be phased out next year.
"Umpteen number of times I have stated that in due course
we shall have to take corrective measures (phasing out of
fiscal stimulus) but still I do feel that strong domestic
demand is necessary... it will continue for some more time",
the Finance Minister told industry leaders here.
Mukherjee returned this week from the G-20 meeting of
finance ministers in Scotland, where they discussed a strategy
to exit the global stimulus running into trillions of dollars.
After the global financial meltdown hit Indian shores
towards end of 2008-09, the government and Reserve Bank of
India (RBI) took collective steps to boost demand by cutting
taxes and interest rates.
The initiatives, however, pushed up fiscal deficit to 6.8
per cent of the GDP - which in turn has negative implications
on borrowing costs and could thus potentially hurt economic
activities, including investments.
Mukherjee said return to fiscal consolidation is on the
government's agenda as indicated by the Prime Minister but
till the robust recovery takes place in developed countries,
the support would have to continue as a sizable portion of
India's USD 185 billion exports go to the western markets.
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