Move now towards gradual exit from stimulus: PM

ON BOARD AIR INDIA ONE - With the Indian economy set to grow at 8.5 percent this fiscal after a drop to 6.7 percent two years ago, Prime Minister Manmohan Singh has said the time had come for fiscal consolidation and gradual withdrawal of stimulus.

“I think we have now moved to a stage that we cautiously are working towards financial consolidation,” the prime minister told the media delegation that accompanied him on the way back from the G20 Summit in Seoul Friday.

“Monetary policy measures have been taken by the Reserve Bank, and gradually, our fiscal system will also move in the direction of consolidation,” said the prime minister, when asked if India intended to continue its fiscal stimulus as opposed to consolidation.

The prime had said at the G20 Summit that advanced deficit countries needed to follow policies of fiscal consolidation but that did not mean that they needed to front load their withdrawal of packages — meaning the exit must be gradual.

(Arvind Padmanabhan can be reached at arvind.p@ians.in)