The 'most appropriate' timing for a gradual rollback of the fiscal stimulus package would be the next financial year, chairman of the Prime Minister's Economic Advisory Council C Rangarajan said on Wednesday.

"It will be a calibrated one and I think the process can be started next year," Rangarajan told reporters on the sidelines of the Skoch Summit -- a meeting of financial leaders -- in New Delhi [ Images ].

He said, however, the roll-back of tax incentives would also depend on the way the economy evolves.

Rangarajan said with expectations of a normal monsoon, the economy is likely to grow by 7-8 per cent in the next fiscal.

The gross domestic product grew by 6.1 per cent in the first quarter of 2009-10 and the year may end with 6.5 per cent.

On monetary policy, he said if inflationary pressure builds up, the Reserve Bank of India [ Get Quote ] may begin tightening rates even earlier.

"If the inflationary pressure develops, then authorities may take action even earlier. . . RBI will have to wait and see how price situation evolves during the period of November-December," former RBI governor said.

Inflation, which was at 0.1 per cent for the week ended October 24, is expected to rise to around 5 per cent by March next year while food inflation is already hovering around 15 per cent, burning a hole in the pocket of the common man.