New Delhi, Jan 5 : Finance Minister Pranab Mukherjee Tuesday kicked-off his consultations with the captains of the Indian industry as part of the annual exercise before presenting the country's budget 2010-11.

The consultations come in the backdrop of the government contemplating discontinuation of fiscal stimulus package and at a time it is facing the problem of rising inflation and high liquidity.

The representatives of the Indian industry urged the finance minister to continue with the fiscal stimulus for the next six months as withdrawing it could harm the pace of the economic recovery.

They also demanded tax reforms through early introduction of a goods and services tax (GST) and also a reduction in the fiscal deficit.

Representatives from the industry forum Federation of Indian Chambers of Commerce and Industry (FICCI), the Associated Chambers of Commerce and Industry (Assocham) and Confederation of Indian Industry (CII) and others met the finance minister.

After the meeting, Harsh Pati Singhania, president of FICCI, said the stimulus should be continued. "It will affect the recovery of our economy. We have also asked for reduction in minimum alternate tax and keeping the bank interest rates unchanged," he said.

CII president Venu Srinavasan said the fiscal deficit should be brought down to five percent. "But I think we must keep in mind the need for growth and employment."

India's fiscal deficit, estimated at 6.8 percent of gross domestic product for the current fiscal, is of concern for the government as its borrowings have increased to a record Rs. 4.51 trillion.

Swati Piramal, president of Assocham, told reporters that the finance minister was sympathetic towards the concern of the industry representatives. "Stimulus package should not be suddenly withdrawn but should be gradually phased out as the industry is just coming out of recession," she said.(IANS)