Business

Stress on package for next fiscal also

NEW DELHI: Planning Commission Deputy Chairman Montek Singh Ahluwalia on Friday indicated that as the global meltdown would continue through to next year, the Indian economy would require another round of stimulus in fiscal 2009-10 to minimise the impact of the downturn.

Projecting a rather grim scenario while interacting with the media on the sidelines of a function here to felicitate Nobel laureate Amartya Sen on his 75th birthday, Dr. Ahluwalia said: “Since [the] global slowdown is not [just] this year but will continue next year also, fiscal stance that needs to be considered should not be just for this fiscal but also for the next year.”

“In my view, [the] need for fiscal stimulus will not end this fiscal, it will go beyond that,” he said to stress the severity of the crisis while noting that the Commission was working on Plan allocation estimates for 2009-10.

As part of the stimulus package announced earlier this month, the Government sought to hike Plan expenditure on infrastructure projects and also slashed excise duty by four percentage points across-the-board to induce demand and spur economic growth.

On the issue of fiscal deficit, Dr. Ahluwalia conceded that the gap would be much more than budgeted, but the more crucial aspect in such trying times was to ensure that the stimulus package was implemented and the additional funds provided were actually spent. “On the fiscal side, I think it was necessary to give the economy the stimulus it needs, we have made it clear [that] fiscal deficit will be larger and government will report that to Parliament at [an] appropriate time. That was the right thing to do. Nobody is saying that we should stick to [the] fiscal deficit target,” he said.

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