Rolling back of stimulus not at one go: Centre

Certain items in the packages will be retained, while some will be withdrawn

“The general indication today is that stimulus will continue this year, that is the indications given by everybody. Let us not think stimulus is something that will be withdrawn all at once,” Cabinet Secretary K M Chandrasekhar told reporters on the sidelines of a CII event.

Chandrasekhar said certain things in stimulus packages might be retained while certain things might go.

He, however, refused to specify which part of stimulus will be withdrawn. “We have not thought what to remove. Stimulus contains many things that might change,” he said.
On broad spectrum, the government has cut excise duty by six per cent, service tax by two per cent and stepped up plan expenditure. However, certain sector specific sops like more leeway to IIFCL to raise money to fund infrastructure project, interest subvention and duty refunds for exports were also doled-out to help the industry.
While industrial growth has been on the upswing, exports have declined for the 13th month in a row.

At the seminar, Finance Minister Pranab Mukherjee, too said “short term” stimulus would be withdrawn when recovery is firmly in sight.

After contracting for months since October last in a fall out of the deepening global financial crisis, industrial production has started firming up again.
Industrial growth stood at a whopping around 11 per cent in August and 9.1 per cent in September. However, merchandise exports shrank to $12.5 billion – down by 11.4 per cent, for the thirteenth month in a row in October, as demand continued to remain sluggish overseas.

The grim scenario is that exports declined, despite a low base of October last year.
However, Chandrasekhar said stimulus packages have been working and there is improvement on all economic parameters.

Economic growth
Indian economy grew by 6.1 per cent in the first quarter of this fiscal against 5.8 per cent in the preceding two quarters.

Mukherjee said the impact of the financial crisis on the common man in India would have been harder without stimulus packages provided by the Government and RBI.
He said the impact of the meltdown has been less pronounced on India, particularly because of market discipline enforced by sector regulators, while maintaining competitive environment.

The Finance Minister also allayed concerns that the current high level of fiscal deficit, projected to be 6.8 per cent of GDP this fiscal, would leave little resources for the private sector.