The Indian industry on Monday said that rolling back of fiscal and monetary stimulus packages, injected by the government to counter the effects of economic downturn, at this stage would be "counter-productive and disastrous to the industry."
The package needs to be continued undeniably, Federation of Indian Chambers of Commerce and Industry President Harsh Pati Singhania told reporters after a meeting of the executive committee of industry body FICCI.
"What we are seeing in terms of economic recovery at this stage is in great measure because of the stimulus package. So, any withdrawal of that would be very counter-productive and in fact, disastrous to the industry," he said.
FICCI cautioned against withdrawal of the incentives by the government in its bid to tame inflation.
Singhania said the GDP, industrial production and core sector performance in recent months has been encouraging and all these are pointers that an economic recovery is underway.
"However, it is important to recognise that we are still in the early stages of the recovery process and it will take time to consolidate the gains", he said.
"Till that happens, any move to withdraw the fiscal-monetary stimulus will have grave consequences for the economy as it will jeopardise the incipient economic recovery", he said.
Singhania further said any move by the RBI to temper inflationary expectation by tightening the monetary policy would not be appropriate as it would siphon off much needed liquidity from the economy so crucial to beef up demand and fuel growth.
FICCI said tightening monetary measures would hit growth and impinge on the performance of industrial sector.
It suggested that monetary policy action should be withheld by the RBI till the time economy returns to the eight per cent growth mark and maintains this pace for at least two consecutive years.
