Economists said the stimulus should not be withdrawn until the economy has recovered fully. Economists asked the Finance Minister Pranab Mukherjee to continue the stimulus while also trying to consolidate the huge fiscal deficit.

“The general feeling of economists is that it is not the time to withdraw the stimulus,” said Nitin Desai, who is a former chief economic advisor. While another economist said that the government should also concentrate on controlling the deficit by taxing services. 

In the current financial year the fiscal deficit is expected to rise to 6.8 per cent of the GDP. The government has set targets of a fiscal deficit of 5.5 per cent in 2010-11 and 4 per cent in 2011-12. 

The economist, Govinda Rao who is the director of National Institute of Public Finance and Policy and is also a member of Prime Minister’s Economic Advisory Council indicated that the targer of 5.5 per cent in 2010-11 could be achieved in the absence of payable arrears like that of the 6th pay commission and lesser outflow for farm loan waivers.

He also advocated increasing the excise duty from 8 to 9 per cent while bring down service tax from 10 to 9 per cent.

Other’s stressed the point that the country has not fully recovered from the financial crisis. The industry chambers have also urged the government to continue with the stimulus for another six months.

The government had reduced excise duty by 6 per cent and service tax by 2 per cent and also boosted its plan expenditure to help the industry cope with the crisis in the international markets. The Indian economy recorded a growth of 7.9 per cent in July-September quarter this financial year.