PM adviser says RBI may trim stimulus
MUMBAI (Reuters) - The Reserve Bank of India may withdraw some monetary stimulus if inflation rises towards the end of 2009, C. Rangarajan, chairman of the Prime Minister's economic advisory council, said on Wednesday.
"If inflation pressures develop, monetary authorities may take measures earlier. RBI (Reserve Bank of India) will wait and see how price situation develops in Nov-Dec," Rangarajan said.
The fiscal deficit needed to be reduced by 1 to 1.5 percentage points in the next fiscal year, he said.
"Next year we might have to start the process of withdrawing some of the measures," he said referring to the fiscal stimulus, adding that excise duties needed to be adjusted while the government's expenditure needed to be cut in 2010/11.
(Reporting by Rajkumar Ray; Editing by John Mair)
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