Expressing satisfaction at the 7.2 per cent growth estimates for this fiscal, the Planning Commission on Monday 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 the 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,” Mr. 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 seven plus per cent growth path...The economy is expected to grow at over 8 per cent next fiscal“.
The Central Statistical Organisation (CSO) on Monday pegged the economic growth for current fiscal at 7.2 per cent, up from 6.7 per cent a year ago.