21/09/2009 (RTT News) - Stimulus measures introduced in the last fiscal year to protect the country from the impact of the global economic meltdown would continue till there are signs of clear recovery in recession-hit U.S and Europe, India's finance minister Pranab Mukherjee told reporters on Saturday.

At the conclusion of the recent G-20 Finance Ministers' meeting in London, the group concluded that the economies across the world should continue with the stimulus packages till full recovery in Europe and North America is distinctly visible, he told reporters after an interactive session organized by the CII on the proposed direct tax code.

The finance ministers of the G-20 countries met in London earlier this month to prepare a brief for the third heads of governments summit to be held on September 24 and 25 at Pittsburgh, where Prime Minister Manmohan Singh is also participating.

As part of the two stimulus packages announced in December 2008 and January 2009, the UPA government in its previous term had slashed excise duty by six percent and service tax by two percent.

"I feel there will be some improvement in the third and fourth quarters of this fiscal year. We shall have to wait for some more time before we take any decision to reverse the economic package," Mukherjee said and added that he would have an overall look into all aspects at the time of formulating the budget proposals next year.

India's GDP grew 6.1 percent in the first quarter. Provisional GDP data for the second quarter will be released next month.

While agreeing that prices of certain essential commodities were high, the finance minister said the government was encouraging imports of essential commodities like sugar, edible oil and pulses to arrest the rise in prices.

All state governments have been asked to revamp the public distribution system to prevent the adverse impact of the rising prices of essential commodities and food articles on persons below poverty line, he said and noted that a dear money policy at this juncture may have an adverse impact on overall growth.

Additionally, the finance minister spoke about the government's austerity drive in cutting the non-plan expenditure. He also allayed concerns over the new direct tax code and said the government was committed to tabling the Bill during the winter session of Parliament. The government hopes to introduce the new code with effect from April 1,2011.