Domestic demand would hold the key for the Indian economy’s recovery, and the timing of withdrawing fiscal sops would hinge on sustained rise in consumption expenditure at home, Finance Minister Pranab Mukherjee said on Tuesday.
“There is a need of generating strong domestic demand until the robust recovery all over the world, particularly the developed world takes place,” he said at the annual Indian Economic Summit organised by the World Economic Forum and the Confederation of Indian Industry.
On Sunday, Prime Minister Manmohan Singh had said the government would begin rolling back next year the measures introduced to counter a downturn, but also promised more economic reforms ahead.
“The prime minister, I understand, has responded to this question. This cannot continue for a long period of time… fiscal consolidation is absolutely imperative,” Mukherjee said.
“It (exit of stimulus) will happen in due course. We shall have to take corrective measures,” he said.
The finance minister was hopeful of economic growth of more than 7 per cent in the fiscal year ending March 2011. “Maybe in 2012 we will be able to reach the magic figure (of 9-10 percent growth),” he said.