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As far as the Indian economy is concerned it has seen steady expansion in domestic demand while savings and investment rates have picked up. The series of fiscal and monetary steps have helped revive demand.

Early signs of revival of the Indian economy are visible though failed monsoons have cast a shadow on agricultural growth. The economy is expected to grow by about 6.5 - 6.7 % despite the poor monsoons. The figures of industrial index of production released in September for July showed 6.8 per cent growth in factory output. Reflections of an economic revival can also be seen in the current capital market rally.

But these preliminary indications do not completely reflect a revival and there is need to be very cautious in every measure taken, as an adverse policy can result in a deeper slump.Indian policy makers need to keep borrowing costs low to aid a nascent economic recovery even as inflation quickens. A dear money policy or credit curbs at this juncture will have an adverse impact on growth.

So though the stimulus packages have resulted in the economy being virtually back on the growth track, there is still some time before we can expect the withdrawal of stimulus and allowing the market forces to takeover.

Is It All Good : The Adverse Effects of Stimulus

There is growing concerns across the world regarding the adverse effects of a stimulus package. Let us take a look at some of these major issues:

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* Contributed by: -
Madhav Kumar Sharma, is a student of MBA at NMIMS, Mumbai. His specialization is in Finance. Before joining NMIMS, he had four years of work experience in the merchant navy as an Engineer Officer. His interests include finance and economics.