Montek pitches for stimulus exit in Budget

Expressing satisfaction at the 7.2 per cent growth estimates for this fiscal, the Planning Commission today pitched for phased withdrawal of stimulus in the forthcoming Budget to be unveiled by Finance Minister Pranab Mukherjee on February 26.

"We should say the stimulus has succeeded and we should begin to phase it down. Fiscal deficit next year would be lower than that of this year," Commission's Deputy Chairman Montek Singh Ahluwalia said.

In order to help the industry combat the impact of global financial crisis, the government had provided three stimulus packages to the industry resulting in a revenue sacrifice of Rs 1.86 lakh crore.

The stimulus, which included tax cuts and raising public expenditure, is expected to push up the fiscal deficit to 6.8 per cent of GDP during 2009-10 from 6.2 per cent a year ago.

"Industry looks at that part of the stimulus which affects them," Ahluwalia said, adding the real issue is the growing fiscal deficit which needed to be curtailed.

While arguing for withdrawal of incentives provided to the industry, he said: "The economy is back on 7 plus per cent growth path...The economy is expected to grow at over 8 per cent next fiscal."

The Central Statistical Organisation (CSO) today pegged the economic growth for current fiscal at 7.2 per cent, up from 6.7 per cent a year ago.

About the CSO's estimates of a 0.02 per cent compression in growth of farm output during the current fiscal, Ahluwalia said: "In September, when we had estimated agricultural growth would shrink by 2 per cent...But despite severe drought, CSO is projecting this number at just 0.02 per cent. I think this is good."

Ahluwalia, who is member of the high-level group comprising chief ministers and union ministers to deal with the problem of price rise, said: "We do not have any problem of food stocks. The food grain stocks on January 1 was much higher than that of last year."

"Prime Minister Manmohan Singh has also said that we should not worry about foodgrain. I am expecting the food price to soften," he said.

About skyrocketing prices of sugar and pulses, he said, "World over there is shortage of sugar and its price has gone up. For pulses we have to depend on imports. But I am sure that agriculture ministry is doing something to increase domestic production."

Asked about unprecedented surge in vegetable prices, he said, "Vegetables can not be compared with foodgrain as these are seasonal. Like the potato prices have come down recently, others price would also soften."