Economists want fiscal stimulus to stay
The Hindu Business Line, January 16, 2010, Page 17
Our Bureau, New Delhi
The Government must continue with the fiscal stimulus for another year. This was suggested by top notch economists at a pre-Budget meeting with the Union Finance Minister, Mr Pranab Mukherjee, here today.
“We said that it is not yet time to withdraw stimulus,” Mr Nitin Desai, a former Chief Economic Advisor in the Finance Ministry, told reporters after the meeting. Most economists felt that time is not ripe for withdrawal of the stimulus.
“My suggestion was that stimulus should continue. It would be better to broaden the tax base rather than increase rates,” Dr M Govinda Rao, Director, NIPFP, said. He said the Centre should look at merging the Cenvat and service tax to say 9 per cent level in the upcoming Budget.
Other issues
The other issues that came up for discussion included the trade-off between growth and inflation, need to check unbridled capital flows and fiscal consolidation. On capital flows, the views were mixed, with some making a case for a tobin tax and many opposed to any form of tariffs at this juncture.
“Some felt that the US carry trade could play havoc on developing countries like India and advised caution. My view was that Indian capital account has been too open. Unbridled capital flows should be checked. But I am opposed to tobin tax. One has to take a call on capital inflows from a long-term perspective,” Dr Partha Sen from Delhi School of Economics, said.
The Hindu Business Line, January 16, 2010, Page 17
Our Bureau, New Delhi
The Government must continue with the fiscal stimulus for another year. This was suggested by top notch economists at a pre-Budget meeting with the Union Finance Minister, Mr Pranab Mukherjee, here today.
“We said that it is not yet time to withdraw stimulus,” Mr Nitin Desai, a former Chief Economic Advisor in the Finance Ministry, told reporters after the meeting. Most economists felt that time is not ripe for withdrawal of the stimulus.
“My suggestion was that stimulus should continue. It would be better to broaden the tax base rather than increase rates,” Dr M Govinda Rao, Director, NIPFP, said. He said the Centre should look at merging the Cenvat and service tax to say 9 per cent level in the upcoming Budget.
Other issues
The other issues that came up for discussion included the trade-off between growth and inflation, need to check unbridled capital flows and fiscal consolidation. On capital flows, the views were mixed, with some making a case for a tobin tax and many opposed to any form of tariffs at this juncture.
“Some felt that the US carry trade could play havoc on developing countries like India and advised caution. My view was that Indian capital account has been too open. Unbridled capital flows should be checked. But I am opposed to tobin tax. One has to take a call on capital inflows from a long-term perspective,” Dr Partha Sen from Delhi School of Economics, said.
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