Indian Prime Minister Manmohan Singh has urged the world economies to continue with stimulus packages till 2010 and avoid all kinds of protectionism including in the financial sector to battle the global economic slowdown.
When asked about India's stand on fiscal stimulus, Singh told the Financial Times in an interview: "I've seen a letter from the managing director of the IMF saying that the stimulus that has been planned in the year 2009 by major economies amounts to 2 per cent of (world) GDP.
"This is probably adequate but it's necessary to ensure that stimulus is sustained and maintained in the year 2010."
Singh, who is here to attend the second meeting of the leaders of the G-20 in about a month, said, "Protectionism has to be avoided -- protectionism not only on the goods but also in the area of services. Financial protectionism is also bad and should be avoided."
"Some action by the developed countries particularly the withdrawal of capital resources from the developing countries by the banks of the developed countries is equally worrisome.
"We have entirely agreed that protectionism of all sorts including financial protectionism has to be avoided. Although some countries have taken action, in practice the impact of what has been done has not been reversed," he added.
Singh said India's fiscal stimulus for the time being is "adequate". "With the decline of inflation there is added manoeuvrability in the use of monetary policy which will be utilised when and where it becomes necessary," he added.
"Our growth rate has been affected; we were having a growth rate of 9 per cent until 2007/8, (from when) the growth rate has come down to 7 per cent and maybe lower than that," he said.
"We have taken measures. Our fiscal deficit has gone up substantially. We have deliberately allowed it to go up to provide stimulus as a substitute for the decline of exports, for the decline of international capital," Singh said.
Asked whether his coalition government was a constraint in bringing in more reforms, Singh said: "You would have liked to push through more reforms. The coalition has its own compulsions."
"It is certainly true that we would have liked to move faster on some elements on the (economic) reforms but politics is the art of the possible," he added.
Singh further said resolving the current global financial crisis needs a long time. "Beyond a point they are issues relating to the redistribution of powers among nations. I don't think these are issues that can be resolved in a short period of time," Singh said.
