ECONOMIC SURVEY 2009-10
Tribune News Service
New Delhi, February 25
The good news is that India has averted a recession and come out of the slowdown faster than what was predicted by experts. The country is back on the 9 per cent growth path with its gross domestic product (GDP) even going up to double-digit figures to emerge as the fastest growing economy in the world over the next four years.
With the Indian economy now back on track, the survey has suggested that the $37-billion stimuli given since December 2008 to help the country deal with global slowdown, be withdrawn gradually.
The bad news is that skyrocketing prices of food items remain a matter of great concern. Admitting to high double-digit food inflation, the survey has gone a step ahead to warn that overall prices could go up even further in the next few months, blaming poor food management for the present state of affairs.
The Economic Survey, which is seen as a precursor to the General Budget which is to be presented tomorrow, has noted that food price inflation stood at 17.9 per cent for the week ending January 30 which has been put down to a combination of supply side bottlenecks and last year’s poor monsoons.
“Since December 2009 there have been signs of these high food prices, together with the gradual hardening of non-administered fuel prices, getting transmitted to other non-food items, thus creating some concerns about higher-than-anticipated generalised inflation over the next few months,” the survey pointed out.
The agriculture ministry was rapped on the knuckles for the spiralling prices of sugar. “In the case of sugar, delay in market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months,” the survey added. High inflation was also reported in the case of onions and potatoes among vegetables along with pulses, rice and wheat.
Concerns on food inflation have been offset by a host of other factors, which, according to the survey, augur well for the country’s economy and suggest that the economy’s fundamentals are strong. For instance, the rates of savings and investment have reached levels that even 10 years ago would have been dismissed as a “pipedream for India.” “On this important dimension, India is now completely a part of the world’s fast-growing economies.” the survey said.
In addition, there has been a revival in investment and private consumption demand though the recovery is yet to attain the pre-2008 momentum. Exports have recorded an impressive growth in the last three months while infrastructure services, including railway, power, telecommunications have shown a remarkable turnaround and even the manufacturing sector has been “showing a buoyancy in recent months rarely seen before.”
“The growth rate of the index of industrial production for December 2009 was a remarkable 16.8 per cent,” the survey said, adding that corporate earnings have also picked up substantially.
“The Indian GDP can be expected to grow around 8.5 per cent (plus or minus 0.25 percent), with a full recovery, breaching the 9 per cent mark in 2011-12,” said the survey. The robust growth path of around 9 per cent that it was before the global crisis slowed it down in 2008.”
However, the slow growing agriculture sector remains a cause for concern as it is the economy’s mainstay and provides employment to a sizeable population. “There is need to undertake serious policy initiatives to reach the government’s target of sustained 4 per cent growth in this sector.”