Tuesday, March 02, 2010

India to review stimulus, after returning to 7.9% growth.

Stimulus measures introduced to boost the Indian economy during the downturn will be reviewed, the government said as it unveiled its annual budget.

Indian federal finance minister Pranab Mukherjee said the measures had helped to maintain strong growth, but inflation must now be controlled.

The government also pledged to cut debt levels and review public spending.

The Indian economy is expected to grow by 8.7% in the current fiscal year, Mr Mukherjee added.

"The Indian economy now, is in a far better position than it was a year ago," he said.

"The first challenge before us is to quickly revert to the high GDP growth path of 9%."

India's economy is recovering faster than expected - it grew at an annual rate of 7.9% in the three months to the end of September 2009, after growing 6.7% in the year to the end of March 2009.

Strong growth in India's manufacturing sector is also helping to compensate for falling agricultural output.

BBC News - India to review economy stimulus

These rates of growth are only 2% higher than US rates, so it is possible the US could ease back its stimulus over the next year, followed by the EU, assuming no one loses his nerve.

This was the first globally coordinated response to a major economic crisis, and it has been a stellar success. America was still hit hard, but given that every one of its major banks with the exception of a few were on the point of failure a bit over a year ago we should count are blessings.

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