TORONTO, June 26 Citing a risk of deflation,
Indian Prime Minister Manmohan Singh said the Group of 20 major
and emerging economies should not rein in budget deficits too
fast but coordinate policy to ensure a sustained economic
"My own feeling is that early fiscal retrenchment carries
very considerable global risks," Singh told the Toronto Star in
an interview published on Saturday, shortly before his arrival
for the G20 summit in Toronto over the weekend.
"But right now, the danger of deflation in the global
economy is, in my view, much greater than the danger of
inflation," he said.
The G20 meeting takes place amid a debate over how to
improve public finances without compromising the uneven
recovery from the global financial crisis.
The U.S. has argued the recovery could be derailed by the
accelerating austerity measures taken in much of Europe to cut
debt and deficits. But G8 leaders appeared to have papered over
their differences ahead of the summit. [ID:nN25200590]
Singh said the manner of Europe's handling of its debt
problems would be "a major determinant of which way the world
India has begun its own process of rolling back stimulus
measures announced in the wake of the financial crisis.
It has outlined a roadmap to cut its deficit to 4.1 percent
of GDP by end-March 2013, from a budgeted 5.5 percent in the
current fiscal year to end-March 2011, helped by buoyant
revenues from accelerating growth.
Asia's third-largest economy is set to grow 8.5 percent in
the current year, following a 7.4 percent expansion in the
(Reporting by C.J. Kuncheria; editing by David Storey)