India will continue withdrawing economic stimulus introduced during the financial crisis and carry on increasing interest rates on personal loans despite uncertainty associated with euro zone’s debt problems, finance minister said. Pranab Mukherjee said that a worsening debt crisis in Europe could affect India’s and other emerging economies’ exports and growth, but this risk was not preventing India from slowly reversing fiscal stimulus.
Asked if uncertainty surrounding the impact of Europe’s debt crisis on the world economy was a reason to prevent further interest rate rise despite previous quarter’s encouraging growth, Mukherjee said, “No, we won’t pause them.”
But Mukherjee said India would carry on consolidating its finances and highlighted the difference between the comparative fiscal health of emerging economies and debt-laden euro zone nations. “You need fiscal prudence and in the developing countries, we are doing so.”