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| FM may mull stimulus withdrawal post Q2, Q3 growth |
| Press Trust of India / New Delhi Oct 30, 2009, 15:20 IST |
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 The government today said it may take a call on exiting from fiscal stimulus after reviewing the economic growth in the second and third quarters of this financial year.
Finance Minister Pranab Mukherjee would also share his perception on exit strategy at the G-20 Finance Ministers' meeting in Scotland, starting from November 6.
"So far we are concerned, I think I shall have to watch situation for the (economic) progress in the second quarter and third quarter. Perhaps, I may be in a position, I am not asserting that position, to articulate it (exit strategy), sometimes when the d-day will come," Mukherjee said at the Hindustan Times Leadership Summit here.
"Next week, I am going to share my perception what should be the exit policy in G-20 Finance Ministers meeting in Scotland, just next Saturday," he said.
He said instead of blanket exit strategy for all nations, each country should devise their own plans depending on their economic situation.
"We are strongly advocating that at different points of time, the crisis was held by the country concerned, and they know where the shoe pinches, therefore instead of having any blanket exit strategy all over the world, let the states make an assessment in the context of the situation prevailing at that point of time and take appropriate decision," he said.
In its fiscal stimulus measures to perk up the slowing down economy, the government cut excise duty by six per cent, service tax by two per cent in phases and increased planned expenditure.
The economy grew by 6.1 per cent in the first quarter of this fiscal. The numbers for the second quarter are expected by November-end and that of the third quarter by February-end.
It means that the government might take a call on exit strategy sometimes in March or next fiscal. But, from next fiscal, Goods and Services Tax is expected to be introduced, which would make a broad comment on whether stimulus is withdrawn or not.
However, Mukherjee said he would not be surprised, if GST implementation is delayed by a few months.
The Finance Minister also expected the economy to come to high growth path of around nine per cent in the next two years. But for that farm sector growth, he added, should be more than three per cent, where as it is expected to be negative two per cent this fiscal.
The Reserve Bank has already started the first phase of exiting from monetary stimulus by raising the Statutory Liquidity Ratio, which is the amount of deposits that banks keep in the form of gold, cash and government bonds, by one percentage points to 25 per cent.
The Reserve Bank has also withdrawn certain liquidity measures announced for mutual funds etc.
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