“We are heartened by visible signs of recovery in the economy. We do not visualize any shift in the ongoing fiscal and monetary policies just because of this early recovery (in the economy),” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.
Asked whether the government would withdraw from the ongoing stimulus packages designed to revive the economy hit by the global slowdown, he said “there is still need for continuation of the ongoing stimulus packages.”
“All over the world the governments are going ahead with continuation of stimulus packages. Though our economy has started showing signs of recovery the need for spurring the cycle of demand on a continuing basis exists,” Ahluwalia said on the sideline of a seminar on “Evaluation of Development” jointly organized by the Planning Commission and the World Bank said.
Early recovery
“The Indian economy has started recovering earlier than expected. Some of the leading economies of the world have started showing signs of improvement. Still it is difficult to say the worst is over. We have to constantly ensure that economy cruises along the higher growth trajectory continually,” he said.
The government could take a re-look at the stimulus packages only when the economy grows beyond 7 per cent, Ahluwalai said adding “may be in 2010-11 with the economy moving to above 7 per cent growth rate the government can assess the situation and think of changing the stance of fiscal policies.”
Asked about the growth projection of the Indian economy in the face of signs of early recovery surfacing, he said “the Planning Commission has projected a 6.3 per cent economic growth rate in the current fiscal. We were apprehensive of scenario on agricultural front in the face of weak Monsoon. Now the situation does not look that bad.”
“We can expect GDP growth rate of 6.5 per cent plus in the current fiscal,” he said.
Industry growth. Asked about the industry posting spectacular growth rate of more than 10 per cent in August this year, he said “this reflects the impact of stimulus packages unveiled by the government to put the economy on recovery mode.”
In reply to a query about the export continuing to witness negative growth rate Ahluwalia said there could be upward trend in country’s export only when there was reversal of ongoing contraction in demand cycle at the global level.
“I am afraid the export might continue to face this type of (negative) growth all throughout the current fiscal. There could be turnaround in the first quarter of next fiscal 2010-11 with improvement in the global economy,” he said.
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