The monetary and fiscal stimulus packages should continue till there are signs that private demand has revived, India’s chief statistician Pronab Sen said here Saturday.
“Stimulus packages on the fiscal front are being rolled back while mild steps are being taken to withdraw the monetary steps. We need concrete evidence of revival in demand before they are rolled back fully,” Mr. Sen told reporters on the sidelines of a seminar organised by the Merchants’ Chamber of Commerce.
Mr. Sen, secretary in the ministry of statistics and programme implementation, said the nature of current investments and consumption pattern indicated that they were not sustainable.
There were no signs of fresh private investments yet. Investments that were taking place now were all those which were postponed when the global economic crisis took place, he said.
“What we are seeing since December is the bunching effect of investments being implemented simultaneously after they got deferred,” he added.
Sen said consumer durable sector had been growing at a healthy rate. He, however, expressed concern over poor growth in the non-durable sector, which makes continuation of demand growth unsustainable.
While the growth of non-durables in 2009—10 was just 1.6 percent, and below 1 percent over the last four months, consumer durables grew by 25.75 percent for the whole year.
“Consumer durables are essentially one—time purchases and most of the purchases got preponed as people expected hike in duties during the budget,” Mr. Sen said.
The gross domestic product (GDP) target for the current fiscal is 8 percent. But to achieve anything beyond that a complete recovery of global economic crisis is required.
“Domestic demand can sustain a growth rate of 7.5—8 percent but to achieve anything beyond that we need strong export market,” Sen said, adding that recovering lost ground in the export market would be a difficult job.
“Competition would be tough and orchestrated as all major global exporters like China, Japan and Germany have their back to the wall and will fight aggressively,” said Mr. Sen.
