New Delhi: India should begin to wind down the fiscal stimulus that was extended to the industry in the wake of the economic meltdown last year, even though the economy has not reached the high-growth trajectory, top economist Raghuram Rajan said on Sunday.
His comments came after Prime Minister Manmohan Singh
today said the government will take appropriate action next
year to withdraw the stimulus. "I think it is quite
appropriate to think about winding it (fiscal stimulus) down
even though we may not have gone back to 9 per cent growth
rate," Former IMF Chief Economist Raghuram Rajan told
reporters at the India Economic Summit here.
Rajan further said the country needs more fiscal space to
deal with "unexpected eventuality". "When we look at our
fiscal deficit and debt level, we really need more space to
deal with unexpected eventuality...there are limits to
government spending," he added.
Having recorded growth rate of nine per cent for three
consecutive years, the economic growth rate decelerated to 6.7
per cent during 2008-09 as the economy came under the impact
of the global financial crisis.
Bureau Report
First Published: Sunday, November 08, 2009, 23:03