Rangarajan pitches for partial roll-back of stimulus

NEW DELHI: In what may be a broad prescription for the government's economic policy road map ahead of the Budget for 2010-11, the Prime Minister's Economic Advisory Council (PMEAC) on Friday pitched for a partial roll-back of stimulus measures to usher in fiscal correction by scaling up excise duties and service tax and “adjusting” Central expenditure without hurting capital spending on infrastructure.

Briefing the media here after releasing the ‘Review of the Economy 2009-10' which projected a GDP (gross domestic product) growth of over 7.2 per cent this fiscal, 8.2 per cent in 2010-11 and 9 per cent in 2011-12, PMEAC Chairman C. Rangarajan said that since the expenditure stimulus was directed at augmenting consumption and not investment, the corrective measures must also focus on adjusting expenditure. “There is a case for adjustment of duties...adjustments are possible both on the revenue side and the expenditure side in order to bring down fiscal deficit,” he said.

Noting that government finances have come under severe strain and the fiscal imbalance “is now a matter of concern”, the PMEAC said: [The] Government cannot continue with the kind of large revenue and fiscal deficits recorded in the last two years and will have to initiate fiscal consolidation in the coming fiscal year (2010-11) itself …in the forthcoming budget to ensure fiscal sustainability, enable greater flexibility in monetary policy calibration, contain interest payments and to avoid upward pressure on interest rates.” link.....