Indian Prime Minister Dr. Manmohan Singh has warned G-20 leaders that early withdrawal of economic stimulus package would be detrimental for economic recovery, particularly for developing world.
The Prime Minister said that everybody knows that developing countries were in no way responsible for the crisis, but they are hit the hardest.
Dr. Singh warned, “We must certainly plan for an orderly ‘exit’ when the time is right, but that time is not now. The global economy may be bottoming out, but it is not expected to reach 3% growth until the end of 2010.
Prime Minister Singh observed that in the past seven years before the crisis, the GDP of the developing countries grew at an average of 6.5 per cent per year. In 2009 it will grow by only 1.5 per cent, implying a fall in real per capita income.
Dr. Singh said that India was less affected by the crisis due to the stimulus package offered by the government.
He said, “India too has been affected but, in common with other Asian countries, we have weathered the crisis relatively well given the circumstances. After growing at 9 per cent per year for four years our economy slowed down to 6.7 per cent in 2008-09.”
He said this year recession is coupled with a drought but even then the country expects to grow by more than six percent.
He said, “In 2009, despite a drought, which will affect agricultural production, we expect to grow by around 6.3 per cent in 2009-10 and then recover to 7 to 7.5 percent growth next year. This relatively strong performance is partly due to the strong stimulus measures introduced in the second half of 2008-09.”
Prime Minister said that the stimulus package has been continued in the current financial year.
Prime Minister said the economic crisis will not only hurt future growth, but also delay achievement of the Millennium Development Goals.
Prime Minister Singh also warned of the consequences of introducing the protectionist measures adopted by some developed countries.
He said. “When unemployment is high, it is inevitable that protectionist pressures will arise. It will be a test of the collective political leadership of this Group, whether we are able to resist these pressures in our countries.”