Fin Min hints of stimulus withdrawal as economy picks up

The finance ministry today hinted at withdrawing the stimulus packages given to industry, saying too much stimulus could prove counter productive with the economy in a revival phase.

Finance secretary, Ashok Chawla told reporters as at a Federation of Indian Chambers of Commerce and Industry (FICCI) seminar in New Delhi that too much stimulus when the body was regaining health was not good and could be injurious to health.

The finance secretary's statement which comes in the wake of the industry asking for continuation of stimulus packages for at least six months starting next fiscal assumes particular importance (See: Corporate India urges Pranab to continue stimulus measures)

The government has cut excise duty by 6 per cent, service tax by 2 per cent and stepped up the Plan expenditure to support the crisis hit economy.

The government's measures have led to an economic revival with growth in the second quarter of the fiscal at 7.9 per cent as against 6.1 per cent in the first quarter and 5.8 per cent each in the preceding two quarters.

Industry however, wants continuation of the stimulus till the economy was on a firm recovery.