Nov. 10 (Bloomberg) -- India will take “corrective” steps and pull back fiscal stimulus once economic recovery takes hold, Finance Minister Pranab Mukherjee said, stressing the need to cut the budget deficit.

“Fiscal consolidation is imperative,” Mukherjee told the India Economic Summit organized by the World Economic Forum in New Delhi today. He said fiscal stimulus will be withdrawn in “due course,” two days after Prime Minister Manmohan Singh said it will be done next year.

India’s exit from measures designed to shield the economy from the global recession may help reduce the widest budget deficit in 16 years and ease pressure on the country’s credit rating. Moody’s Investors Service, which ranks India’s local- currency debt at two levels below investment grade, said today the nation’s sovereign rating won’t be raised unless the government cuts borrowings.

“It’s a delicate balance between growth, inflation and public debt,” Sandeep Parekh, a finance professor at the Ahmedabad-based Indian Institute of Management. “The finance minister was more prudent. You can’t withdraw stimulus mechanically, and it must be done in coordination with the rest of the world.”

To contact the reporters on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net. Cherian Thomas in New Delhi at cthomas1@bloomberg.net

Last Updated: November 10, 2009 04:18 EST