BBC News | 07:54 GMT | Friday, 26 February 2010
India’s government said stimulus measures introduced to boost growth during the downturn would be reviewed, as it unveiled its annual budget. The measures helped to maintain strong growth over the past year, but the authorities now say that rising prices must be controlled. The government projected an 8.7% growth rate for the current fiscal year. Federal finance minister Pranab Mukherjee said the challenge was to return to 9% growth. 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.
Mr. Mukherjee said the economy was now in a “far better position than a year ago”. “We need to reduce the stimulus, important to the economy, and move towards the preferred path of fiscal consolidation,” he said. Mr. Mukherjee stressed the need to cut fiscal deficit, review public spending and cut public debt. The government also announced plans to introduce a Goods and Services Tax and reform direct taxes in April 2011.