India may 'wind down' fiscal stimulus next year, says PM

New Delhi, Nov 8 : Prime Minister Manmohan Singh Sunday said the measures taken by his government helped India brave the financial crisis better than most countries, but it may 'wind down' by next year the fiscal stimulus that was launched last December.

"I am happy to say that India has been able to face the global economic downturn better than most other countries in the world," the prime Minister told the India Economic Summit of the World Economic Forum (WEF).

"Like other countries, we resorted to significant stimulus and we will take appropriate action next year to wind this down. Our medium term objective is to achieve a growth rate of 9 percent per annum," he said.

The prime minister told the high-profile gathering of top business leaders from across the globe that the worst was behind the global economy while the path to recovery remained long and uncertain.

He predicted a growth of 6.5 percent for the Indian economy during the current fiscal and over 7 percent for the next year, adding a return to high growth required work in many directions, especially in the area of creating jobs and rural uplift.

"Our strategy, therefore, must aim at sustaining a high rate of growth on the strength of strong domestic demand. We seek to achieve this through a large increase in investment in infrastructure."

Later, Planning Commission Deputy Chairperson Montek Singh Ahluwalia said the impact of the stimulus package would be reviewed early 2010 before a decision is taken on the modalities for its withdrawal.

"We are also thinking at what pace the whithdrawal of the stimulus should begin. I definitely feel that at the start of the year we should bring out our perception as to how things have moved," he told reporters, maintaining that both the fiscal and monetary stimulus would be withdrawn.

The government had injected a fiscal stimulus of Rs.2 lakh crore, while the Reserve Bank of India had pushed a monetary stimulus worth Rs.1 lakh crore.

Ahluwalia said various agencies across the country were in favour of the government initiative on stimulus package.

"Right now every authority in India has said that thety were quite happy with the policy balance as far as stimulus, both fiscal and monetary action, are concerned for the current year."