India cautions against hasty withdrawal of stimulus packages

New Delhi, Dec 30 (PTI) India has cautioned against
immediate withdrawal of stimulus packages by the governments
as it may lead to "collapse" of the world economy.

"Immediately coming out of the stimulus package ... exit
policy may not be the correct approach because in that case if
the world economy collapses the depression would be deeper,"
Indian Finance Minister Pranab Mukherjee said Wednesday at a
Corporation Bank function while recalling his interactions
with Japanese Prime Minister Yukio Hatoyama Tuesday.
Later, when asked if he was hinting at gradual withdrawal
of stimulus packages, Mukherjee said, "I am not hinting at
anything. What I told (Japanese Prime Minister) was that we
shall have to strike a balance between the requirement of the
economy and the capacity of the economy to bear this level of
fiscal deficit and borrowing."
The Finance Minister said that he has told Japanese Prime
Minister that countries have spent huge amount of money in
stimulus packages to help the economies which has resulted in
high fiscal deficit in almost every country and also greater
borrowing which have propensity to leave little resources to
the private sector.
On the Indian economy, he said that stimulus packages are
projected to widen the fiscal deficit to 6.8 of GDP this
fiscal. He reiterated that this kind of fiscal deficit cannot
be sustained for a longer period. PTI DP
ANU


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