PM warns against exit of economic stimulus

The withdrawal of economic stimulus packages by advanced countries like France, Germany and Great Britain may lead to double-digit recession, warned the Prime Minister, Dr Manmohan Singh.

Without naming the troika, the Prime Minister said, “Contractionary policies, if followed by many
industrialised countries simultaneously, could provoke a double-dip recession”.

Addressing G-20 leaders of key emerging and advanced countries, the Prime Minister pointed to great risks in destabilising fragile recovery and deflation vis-à-vis inflation.

He prescribed a measured and calibrated exit from stimulus measures by developed countries that face “fiscal stress” and deficits. For countries like the US, where the markets have been nervous, he prescribed fiscal consolidation as the way forward.

The UK’s Tory-LibDem coalition government has already announced an aggressive package of steep cuts in budget spending, mopping up funds by taxing banking transactions.

The Prime Minister warned the developed countries from resorting to protectionist policies or imposing trade barriers with an adverse impact on revival in demand for goods and services in developing countries.