Kolkata: Finance minister Pranab Mukherjee hinted on 10 April at further roll-back of stimulus measures announced in the wake of the global financial crisis, saying economic recovery offered room for such a move.
Mukherjee, who in the Budget for 2010-11 partially withdrew some of the stimulus measures by increasing excise duty by 2%, said that the economy could still grow by up to 8.75% in the current fiscal.
“I am hopeful that the growth will climb back between 8.25% and 8.75% and perhaps at the mid point around 8.5 in 2010-11,” he said at a function organized by the Association of National Exchange Members of India here.
He added that “the broad-based recovery has created hope for the gradual roll-back of some unconventional and extra-ordinary measures taken by the government” in the form of stimulus packages.
Besides slashing excise duty by 6%, the government had in late 2008 cut service tax by 2% to cushion the industry from the impact of the global crisis.
Mukherjee exuded confidence that the measures outlined in this year’s budget are likely to revive private investment and put the economy back on the growth path of 9 per cent per annum.
“The pace and the shape of the recovery, however, remains uncertain. The challenge of the hour is to manage the recovery of the economy, which entails a policy reversal from the crisis expansionary stance and recognising the need for carrying forward process of exit,” Mukherjee said.
He said the economy witnessed a “sufficient” slowdown in the growth rate in the second half of 2008-09, following a financial crisis that began in the industrialised nations 2007 and spread across the world.
After clocking an impressive 9% growth for the previous three fiscals till 2007-08, India’s GDP grew by a relatively modest rate of 6.7% in 2008-09. The economy is expected to grow by 7.2% in 2009-10.