New Delhi: Indian economy is poised to grow by 9% in 2011-12 despite risks of global events like volatility in commodity prices, exacerbated by political turmoil in the Middle-East, according to Economic Survey.
The Survey for 2010-11, tabled in parliament by finance minister Pranab Mukherjee, has pegged the economic growth at 8.6% for the current fiscal, helped by broad based rebound in agriculture and “continued momentum” in manufacturing and private services.
Inflation, an area of concern which acts as a road block for the growth, is expected to be 1.5% higher than projected earlier, it said. Food inflation, in particular, has come as major challenge for the economy.
Prime Minister Manmohan Singh had said on Thursday that general inflation would come down to 7% by March end from more than 8% now.
Days ahead of the general budget, the Survey indicated the need for fiscal consolidation.
“Food inflation, higher commodity prices and volatility in global commodity markets have been a cause of concern underscoring the need of fiscal consolidation and stronger reserves,” it said.
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 fiscal 2009-10.
“Rise in food inflation and the critical role of agriculture underlines 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 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.