The government would wait and watch the situation before deciding on rolling back the stimulus packages announced after India's economic growth slackened impacted by the global financial crisis.
The government would wait and watch the situation before deciding on rolling back the stimulus packages announced after India's economic growth slackened impacted by the global financial crisis.
"We will have to wait and watch the situation," Finance Minister Pranab Mukherjee told reporters on timing of reversal of the stimulus package. The government had slashed excise duty by six per cent and service tax by two per cent in various phases and increased Plan expenditure. This has pushed the fiscal deficit higher.
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The fiscal deficit is projected to rise to 6.8 per cent of GDP in 2009-10. The Finance Minister has already said this level of fiscal deficit cannot be sustained and aims to bring it down to 5.5 per cent next fiscal and 4.4 per cent in 2011-12. He hoped to have an overall view of all aspects by the time of formulating the next Budget.
Mukherjee said the international view was that stimulus package should not be reversed till full recovery in Europe and North America was distinctly visible. This viewpoint was expressed at a recent G-20 Finance Ministers preparatory meeting, he said, speaking after an interactive session organised by the CII on the proposed Direct Tax Code.
On price rise, Mukherjee said even when wholesale price inflation was negative, it did not give any satisfaction to the common man, as the consumer price inflation was moving up. He said there was dichotomy between the rates of price rise measured by wholesale prices and retail prices.
Even when wholesale price inflation stood at a mere 0.12 per cent, most retail price indices are way above. To prevent the adverse impact of rising prices, import of essential commodities, including sugar, edible oil and pulses was being encouraged where there is short supply.
The Centre had also requested states to revamp the public distribution system to protect those Below Poverty Line from the impact of price rise by providing subsidised food items.
To a question on concerns over influx of dollars and the Sensex shooting up, creating an imbalance he said, "If there is any unusual impact, it will certainly have an adverse effect. I am noticing the Sensex is moving upward.
"I will not like to disturb the current path, because it is steady and not in spurts. In the last few weeks, it is moving upwards, sometimes it is going up, sometimes down... We are watching it," he said.
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