India needs to strike a balance between economic growth and cutting fiscal deficit, Finance

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Minister Pranab Mukherjee said on Wednesday.

India's fiscal deficit is estimated at 6.8 percent of gross domestic product for 2009/10 (April-March), higher than 6.2 percent in the previous year as the government cut tax rates and boosted spending.

The economy grew 6.7 percent in 2008/09, slower than 9 percent or more in the previous three years.

As for the outlook for the economy, the agricultural production during 2009-10 hinges critically on the performance of the North East monsoon and rabi production. The agricultural sector is also expected to derive support from the 'allied sector' comprising horticulture, livestock and fisheries that has been growing at above 5 per cent during last few years, she said.

With the manufacturing PMI (purchase managers index) for October and November at 54.5 and 53.0, respectively demonstrate continued expansion of the sector although lower than September 2009.

As for global economist prospects, Ms Gopinath noted that excessive dependence on policy stimulus operates is a key risk to sustainability of recovery, and hence the generalised preference has been for the policy stance to err on the side of caution.

The compulsion of exit for different countries, thus, could arise at different points of time, depending on the risks to inflation, extent of recovery in relation to the potential growth path and the policy assessment of risk to sustainable recovery from errors in exit.