New Delhi: Prime Minister Manmohan Singh said on 22 May the Indian economy would grow by over 8.5% in the fiscal year ending March 2008, and the government would keep a close watch on prices.
Releasing a report to mark three years of his Congress party-led government, Singh said credible steps had been taken to tame inflation.
“We have taken credible steps to control inflation and will continue to be vigilant on this front so that the poor and vulnerable sections of society do not suffer unduly,” he said.
Singh’s premiership has seen annual growth rates of between 8 and 9%, but analysts say his government has failed to provide the investment in infrastructure and education needed to build a solid base for future expansion.
Already some sectors of the economy are showing some signs of overheating, and rising inflation has been ringing alarm bells. Ambitious programmes to help poor farmers and create millions of jobs in the countryside have raised hopes, but many of these have foundered on poor implementation. Rural areas remain mired in poverty.
“In a democracy, people’s aspirations become the goals that the governments have to measure up to. Measured against the rising aspirations of a billion plus people -- which is a sixth of humanity -- any government would fall short,” Singh said.
Singh’s communist-backed government swept to power in May 2004 partly because the poor in Asia’s third-largest economy voted the previous government out of office after feeling left out of a city-based boom.
Measures taken by the government to tame inflation were beginning to show results, the report said, and the ruling coalition is confident of keeping inflation under control in future. India’s annual inflation rate fell below 5.5% in early May after running at more than 6% for much of the year, data showed last week.
The Reserve Bank of India, the central bank, aims to keep it close to 5% this fiscal year, and bring it down to 4.0-4.5% over the medium term. Inflation hit 6.7% in early 2007, its highest in more than two years.
The central bank has raised its key lending rate five times in less than a year to contain price pressures. Although it left rates unchanged at a review last month, it said it would act swiftly if conditions warrant.
Singh said his government faced many challenges and he promised to announce a major initiative to boost public investment in the farm sector within 10 days.
“There is much we have done in these three years but much more needs to be done to win the war against poverty, ignorance and disease, and the fight against extremism, communalism and terrorism,” Singh said.