Stimulus packages may go only in next fiscal: Montek
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Last Updated: Friday, November 13, 2009, 18:25
  
New Delhi: The Planning Commission has said the right time to withdraw stimulus packages given to the industry to combat the impact of global slowdown will be during the next financial year.

"Neither fiscal nor monetary policy needs to be changed during the current fiscal year, and the time to make further adjustments to one or both of these instruments will be in the next fiscal year," Planning Commission Deputy Chairman Montek Singh Ahluwalia told Karan Thapar in an interview to a private TV channel.

The changes in fiscal policies will be announced only in next year's Budget, he said, pointing out that the government will not be looking at pushing economic growth through fiscal expansion.

Stock markets went into a downward spiral earlier this month after Prime Minister Manmohan Singh announced that stimulus measures would be withdrawn next year, but Finance Minister Pranab Mukherjee later said that the tonic to the economy would continue till there were firm signs of recovery in the developed world.

"I think you want to avoid any impression that we are looking for a growth that is stimulated by steroids i.e. more and more fiscal expansion...We cannot afford it -- it would be the wrong thing to do," Ahluwalia added.

On inflation, the Planning Commission deputy chairman said the government needs to tackle price rise in food items by a better public distribution system and speeding up supplies.

Ahluwalia said inflation is not a big problem and the government's focus is "to get the economy back to a solid growth path".

He said he expects the economy to grow at 6.3 per cent this fiscal, and the overall inflation to be in the range of 5-6 per cent by March end.

Increasing minimum support prices (MSPs) of rice and wheat, Ahluwalia said, was being done consciously to provide higher returns to farmers, though it led to higher prices of cereals.

"Food prices are going up globally, so there is no reason why Indian farmers shouldn't be getting the benefit of what is a globally appropriate price of food," he added.

However, the Oxford-educated economist said this argument does not extend to vegetable price rise, which is witnessing a "temporary disruption" that might come down automatically.

On concerns over decline in agriculture production this fiscal, he said it would be one to three per cent lower than the previous year.

As for as economic growth is concerned, Ahluwalia said, "...it's not that things are now well set, even to get 6.3 per cent, we have to do a lot of work to make sure that investment comes in."

He said getting back to 9 per cent growth by the end of 11th five year plan, which ends in March 2012, will be a real sign of strength.

Bureau Report


First Published: Friday, November 13, 2009, 18:25


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