Economic Survey reports slightly slower, but broad-based growth this year; a rebound in the farm sector; says higher food inflation, underlines larger investments in farming; calls for acceleration of investments in infrastructure, promoting new areas like tourism, legal and education
New Delhi: Following are the highlights of the Economic Survey for the fiscal year 2010-11, presented in Parliament today, reports PTI.
Headline inflation, which peaked at around 11% in April 2010, has been on the decline. It was 8.23% in January. Headline inflation has been over 8% since February 2010
New Delhi: The spiralling crisis in the Middle East and rising global commodity prices could increase inflationary pressures at home, the Economic Survey today warned, observing food inflation has been in double digits for 76 weeks since 5 June 2009, reports PTI.
“The inflationary pressures on the domestic front are likely to be exacerbated by the higher levels of global commodity prices,” said the survey tabled by finance minister Pranab Mukherjee for 2010-11 in Parliament.
It also indicated that political turmoil in the Middle East and the “easy money” policy being followed by developed nations will have a bearing on headline inflation.
Headline inflation, which peaked at around 11% in April 2010, has been on the decline. It was 8.23% in January. Headline inflation has been over 8% since February 2010.
The survey attributed the decline in inflation to the structural and macro-economic steps taken by the government and the Reserve Bank of India (RBI) to combat rising food prices.
“This year, inflation seems to be driven by demand factors, despite higher supply levels,” the survey said.
This is in contrast to the fact that in the last fiscal, inflation was mostly driven by a deficient monsoon, leading to scarcity of certain food products like pulses, cereals and sugar.
The survey also pointed to the IMF projections of continued pressure on commodity and non-commodity prices. The Middle East turmoil has already taken global oil prices to a two-year high of over $100 per barrel.
“The ten-year average of headline WPI inflation was around 5.3% from 2000-01 to 2009-10... In the current financial year (2010-11), the average inflation (April-December) of 9.4% was also much higher than the decadal rate,” the survey said.
The government has already said that it expects inflation to moderate to around 5% by June-July.
The RBI has also hiked its short-term lending and borrowing rates six times since April 2010, to tame inflationary pressure by tightening monetary supply.
Based on the performance of the economy over the last five years and analysis of the underlying trends... India’s real gross domestic product (GDP) is expected to grow by 9% (+/-0.25%) in 2011-12, the pre-budget survey tabled in Parliament today said
New Delhi: India's economy will revert to the pre-crisis growth level of 9% in the next fiscal, buoyed by strong fundamentals, reports PTI quoting the Economic Survey 2010-11.
“Based on the performance of the economy over the last five years and analysis of the underlying trends... India’s real gross domestic product (GDP) is expected to grow by 9% (+/-0.25%) in 2011-12,” the pre-budget survey tabled in Parliament today said.
For the current fiscal, the economy is expected to grow at 8.6%, it said.
The Indian economy had grown at a rate above 9% for three consecutive years, starting 2005-06, the survey said, adding, “So the economy is expected to revert to pre-crisis growth levels next year.”
It further said that the growth is broad-based, with a rebound in agriculture output and continued momentum in manufacturing and private services.
The agriculture sector is likely to grow at the rate of 5.4% in 2010-11, while industrial output is expected to grow by 8.6% and the manufacturing sector is likely to register 9.1% expansion, it added.
Recognising the fact that prices continue to be high, the survey has underlined the need to “monitor emerging trends in inflation” on a monthly basis while suggesting that the government should improve delivery mechanism by strengthening the situation and addressing “corruption.”
The 456-page report said inflation is expected to be higher than “what would be if the country was not on the growth curve.”
About the growth projections, the document said that with good monsoons, the agriculture sector is expected to grow by 5.4% during the current financial year up from a lowly 0.4% in the last fiscal.
“Rise in food inflation and the critical role of agriculture underline the need for larger investments in the agriculture sector enroute to the second green revolution,” it said.
In its endeavour to achieve higher economic growth, the government should pursue a reform agenda which include over a dozen steps including streamlining land acquisition and faster environmental clearance for infrastructure projects.
The also survey called for an early introduction of the Goods and Service Tax (GST).
It underlined the need for private sector participation in social sectors such as health and education in the form of ‘public-social-private’ partnership for supplementing the government efforts.
In the backdrop of difficulties in land acquisition, the survey, which is considered as report card of the government along a paper prescribing policies to be pursued, suggested formation of a National Forest Land Bank.
This land bank will have clear titles to reduce approval time for forest go ahead.
It said that focus of the government's flagship programme ‘Mahatma Gandhi National Rural Employment Guarantee Scheme’ should be shifted to permanent asset building and infrastructure development.