New Delhi: Combating inflation and sustaining growth momentum may be the top priority, but the government on Monday said it would strive to push economic reforms to encourage foreign and private sector investments in the economy.
“The Indian economy continues to be on a trajectory of high growth despite an adverse global environment... However, there is no room for complacency,” President Pratibha Patil said in her address to Parliament that marked beginning of the Budget session.
The top priority of the government, she said, would include combating high prices especially of food items and sustaining momentum of economic growth.
To achieve this twin objective, she said “we have strived to make the domestic environment more conducive to investment, encouraging public as well as private investment, and domestic as well as foreign investment, particularly FDI.
“We have to maintain the momentum for reforms on a wide front,” Patil said.
Referring to the high inflation during the past one year, the President said “my government is deeply concerned over the adverse impact of inflation on the aam aadmi (common man) and the threat it poses to the growth momentum.”
While the food inflation had touched 18.32% in December, 2010 before moderating to over 11% this month, the overall inflation still hovers above eight per cent as against the comfort level of 5-6%.
The economic growth, however, is expected to be 8.6% for the current fiscal, up from 8% a year ago.
Patil said the government’s proactive measures to counter inflation, like banning export of edible oil and pulses, besides liberalising import regime to ease supply constraints of critical items, have shown results.
“Inflation was declining until November last when unseasonal rains in some states led to a spurt in vegetable prices. These prices have come down again following the arrival of fresh crop,” she said.
The President, however, said the long term solution to check inflation lies in increasing productivity and production.
“My government stands committed to ensuring that farmers get remunerative prices for their produce,” Patil said adding they should be able to sell to the consumers without any impediments.
The President, however, said measures necessary to ensure that farmers sell directly to consumers fall largely in the domain of states.
“Concrete steps will be taken to augment investment and provide suitable incentives to the states in this direction,” the President said in her address.
On the proposed Food Security Law, Patil said, important inputs in this regard have been received from the National Advisory Council.
“The states are being consulted as success of the programme hinges critically on their commitment to reform the Public Distribution System,” she added.