PM says `calibrated attempt` needed at fiscal consolidation

V S Chandrasekar
On Board PM's Special Aircraft, Jun 29 (PTI) Indian Prime
Minister Manmohan Singh Tuesday said "one-size-fits-all"
should not be the approach for controlling government
expenditure among G-20 countries.
Instead, the exit strategy from stimulus should be left to
individuals nations, he said.
"What is needed is a calibrated attempt at fiscal
consolidation rather than one-size-fits-all sort of action,"
he told reporters in his special aircraft, summing up the
decisions of the just-concluded G20 summit in Toronto.
He said even those countries which want to go ahead with
fiscal consolidation, should do it without compromising
growth.
"I think the caveat is that this must be done in a
growth-friendly manner," the Prime Minister said.
He felt even those European countries, with targets at
fiscal consolidation, have been going about their business
with due caution.
"In that way, the Summit has played a useful role in
clarifying what is the scope for fiscal consolidation and what
manner the process of consolidation should be funded," he
said.
Referring to the debate on the levy on financial
institution for funding future bailouts, Singh said that as
far as India is concerned, its banking system remained
well-managed.
The economy was growing at a rate of 8.5 per cent per
annum. Though the fiscal situation was a cause for concern ,
when compared with the fiscal deficit or the GDP-debt ratio of
major developed countries, India came out much better, he
said.
He said the Toronto Summit was in some way a preparation
for the next meeting in Seoul in November.
On India's concerns with regard to the euro zone crisis
and the stability of the banking system in Europe, there was
agreement that the recovery over the last year was rather
fragile.
He said in an increasingly inter-dependent world, there
is need for greater coordination of the macro-policy.
"People have talked about macro-economic coordination
that the consolidation of the financial system, the fiscal
consolidation must be undertaken in a manner that is growth-
friendly," he said. MORE PTI