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Politically difficult decisions needed: EIU

February 26, 2010 18:40 IST

The Economic Intelligence Unit (EIU), on Friday said that the Union Budget presented by Finance Minister, Pranab Mukherjee, would allow the government to start exiting from its earlier-announced stimulus measures in a calibrated manner.

The EIU is the research arm of the UK-based magazine, Economist. Describing the Budget overall as a "positive" one, EIU, however, said that the Government would need to take more "politically difficult" decisions to meet its fiscal target which it aims to achieve over the next three fiscals.

"Overall, the budget is a positive one. It allows the government to start exiting from stimulus measures in a calibrated manner," EIU's Director of Research (India), Manoj Vohra, said in a statement.

The Budget also rightfully identifies skill development and fiscal consolidation as key priorities, he said, adding the availability of skilled labour will be a critical factor in India's quest to become the fastest-growing major economy in the world.

The key, however, lies in implementation, he said. "While the Finance Minister made some bold choices, he fell short of pushing them over the line. The government's target of reducing fiscal deficit to 5.5 per cent in 2010-11 appears to be a little optimistic," he said.

The government will need to take more "politically" difficult decisions to meet this target, Vohra said, adding, "fiscal deficit remains the biggest risk to India's medium- to-long-term growth prospects."

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