Refusing to be drawn into the debate over when should stimulus packages be withdrawn, the Planning Commission today said India will not stand out in the world as an overspender despite the rise in the fiscal deficit because of the sops.
"You can be sure that Indian fiscal deficit will not stand out as a case of overspending ... Because for the first time in 2009-10 so far, India's combined fiscal deficit is actually lower than both the United States and UK," Planning Commission Deputy Chairman Montek Singh Ahluwalia said at a Ficci organised seminar on 'Global Economic Crisis: Back to Keynes'.
Ahluwalia said there is no agreement the world over on when should the stimuli be withdrawn as economists like Joseph Stiglitz and Paul Krugman argue that a premature withdrawal of the stimulus measures may lead to a loss of gains that have been made.
"I don't want to pronounce on it (withdrawal of stimulus)... Simply because one it is a very difficult issue, which the Finance Ministry and the government will be facing in a couple of months from now, when they present the Budget," he said.
Impacted by the deepening financial crisis from the middle of September 2008, India has cut excise duty by 6 per cent, service tax by 2 per cent and stepped up plan outlay to prop up the slowing down economy.
This has widened the Centre's fiscal deficit, which is projected to be 6.8 per cent of the GDP this fiscal. If the states fiscal deficit is added to it, the combined fiscal deficit would be much higher.
Giving the keynote address, noted economist Robert Skidelsky said the present global system is intellectually and politically unstable.
"The question is whether we can afford to go along with a system which crashes every few years, with increasingly serious social consequences," said the professor at the University of Warwick, UK.
He, however, said the countervailing power to the global capitalist set-up cannot be restored to trade unions as the economies now are dominated by the service sector and high tech manufacturing.
But the state could be rehabilitated as an instrument of public interest, he added.
"It can be argued that national states cannot control global capital and that a world state is unavailable. But a single world model of globalisation is not the only one. It is far more plausible to think of global integration via regional integration," he said.
The professor wondered as to how many more crashes there will have to be before ideas about the future of society more sensible than those put forward by today's "market sentiment" win a sufficient hearing to influence the course of events.