No Fiscal Stimulus Exit Yet

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Nov. 4 – The Indian Finance Minister Pranab Mukherjee made it clear today that the Indian government was not planning to exit from the fiscal stimulus packages rolled out in September 2008 in the wake of the global financial crisis.

“I am not thinking of any exit strategy right now. I will take a view on it as and when we are convinced that the economy has come out of the worst situation and is in the firm path of recovery,” Mr. Mukherjee was quoted as saying in the Hindu Business Line.

The finance minister highlighted that he had also advised the G-20 leaders along the same lines. He had said at the last G-20 meeting that it would be better for each country concerned to take a call on the timing of the exit depending on their respective special circumstances, as each country was affected by the financial crisis at different points of time.

Mr. Mukherjee said that India’s return to the 9 percent trajectory will depend not only on recovery in India but also recovery in the world economy. Nearly 60 percent of the country’s merchandise exports are to the Europe and North America. “Unless there is robust recovery of demand for goods and services there, it would be difficult for us to get to the 30 percent growth in exports recorded in recent years. It is difficult to predict when we will return to 9 percent GDP growth levels. It will take a year or little more than that,” he said.