Ficci cautions govt against stimulus withdrawal

The Federation of Indian Chambers of Commerce and Industry (Ficci) today cautioned the Centre against pre-mature withdrawal of the fiscal and monetary stimulus package in its bid to tame inflation.

The Indian industry, which is beginning to respond to the fiscal-monetary stimulus injected by the government last year, needs more time to recover fully and gain strength, Ficci President Harsh Pati Singhania said.

“The GDP, industrial production and core sector performance in recent months have been encouraging. All these are pointers that an economic recovery is underway. However, it is important to recognise that we are still in the early stages of the recovery process and it will take time to consolidate gains. Till that happens, any move to withdraw the fiscal-monetary stimulus will have grave consequences for the economy, as it will jeopardise the incipient economic recovery,” he told reporters after Ficci’s national executive committee meeting.

Reacting to the recent comments made by Reserve Bank of India (RBI) Governor D Subbarao, who had said the government might exit from accommodative monetary policy earlier than the advanced economies, Singhania said the chamber would urge both the government and RBI not to prematurely contract the monetary policy and abandon the fiscal stimulus measures announced to reactivate the growth triggers.