The Federation of Indian Chambers of Commerce and Industry (FICCI) has warned against any withdrawal of the fiscal and monetary stimulus package implemented by the Government in response to the global economic slowdown.
Addressing the media in Bangalore at the conclusion of the FICCI’s Executive Council meeting, President Harsh Pati Singhania said a “withdrawal of the stimulus would prove to be disastrous to the economy.”
Commenting on the recent statement of the Reserve Bank of India Governor D. Subbarao about the “dilemma” of an exit from the stimulus, Mr. Singhania said, “It is important that monetary policy is not tightened at this stage.”
He said the latest numbers on the index of industrial production (IIP), released on Monday, show that industrial output grew at a healthy 10.4 per cent in August, “would not have been possible without the fiscal and monetary measures that have been implemented by the Government.”
“The green shoots we now see are because of the increase in availability of credit,” he said.
Referring to the threat of inflation, Amit Mitra, FICCI Secretary General, said the problems were essentially because of “supply-side problems.”