New Delhi: The prime ministers economic advisory council on 11 September 2001 advised the Central government to be careful of the fiscal deficit suggesting that spending should be controlled within prudent limits.A team of Indias top economists met Prime Minister A B Vajpayee and senior ministers and told them that the government should concentrate mainly on finishing projects mentioned in the budget before the deadlines come to an end.

"The economy awaits action to revive investor confidence and boost growth, but there is no need to pump prime and run up an even higher fiscal deficit," they said. "Lower interest rates are unlikely to make much of a difference in a demand-constrained economy, but a more productive use of public spending will certainly stimulate economic activity. While the global economic slowdown has hurt exports, it is not an important factor contributing to growth deceleration at home."

The rupee, they said, is overvalued and depreciation can boost exports, but wider reforms are also needed to improve competitiveness of the Indian industry and agriculture.

The council suggested that problems relating to capital markets should be looked into in detail. "The government should initiate measures to perk up sentiments on the stock markets."

Almost all the economists who included RBI governor Bimal Jalan, Shankar Acharya, Amaresh Bagchi and Kirit Parekh agreed that global slowdown will persist and may not go away in the immediate future.