New Delhi: Asian Development Bank (ADB)
on Friday warned that hasty withdrawal of economic stimulus could
derail the recovery process in the developing countries, even
as India debates on timing of winding down incentives given to
the industry to combat impact of global slowdown.
"As our region returns to the trend, exit strategies for
fiscal stimulus must be carefully timed. If left too long,
deficits will be unsustainable; if withdrawan too soon, the
region's recovery could be derailed", ADB President Haruhiko
Kuroda said in a speech at Singapore.
ADB chief's statement comes at a time when India is
debating over the timing of withdrawal of three stimulus
packages provided to the industry to combat the impact of
global slowdown.
Prime Minister Manmohan Singh told India Inc last week,
"we will take appropriate action next year to wind this
(economic stimulus) down."
Finance Minister Pranab Mukherjee, however, held the view
that incentives needed to be continued till there was robust
recovery in the developed world which account for bulk of
India's exports.
RBI, on the other hand, started the process of
withdrawing stimulus last month. "The balance of judgement at
the current juncture is that it may be appropriate to sequence
the exit in a calibrated way ... the exit process can began
with the closure of some special liquidity support measures,"
Governor D Subbarao had said.
The monetary and fiscal stimulus measures taken by Asian
economies appear to have worked with the region that is now
showing signs of a V-shaped recovery, ADB President Kuroda
said.
The regional development bank expects developing Asia's
GDP growth to slow from 6.1 per cent last year to an estimated
3.9 per cent in 2009, returning to 6.4 per cent next year, ADB
said in a statement.
Kuroda stressed that Asia must move forward on reforms
that build on national priorities to bolster the regional
agenda, while strengthening domestic demand as a more powerful
source of economic growth.
He said the global financial crisis offers an opportunity
for developing Asia to accelerate regional cooperation and
integration, dialogue and institution-building. It is crucial
to move forward on regional policy coordination, especially on
exchange rates, he said.
Further, he said more action is needed on climate change,
which poses a dire threat to the region's poor, food supplies
and financial prosperity.
Bureau Report
First Published: Friday, November 13, 2009, 18:28