M A I N   N E W S

PM banks on monsoon to halve inflation
Vibha Sharma
Tribune News Service

New Delhi, July 24
Prime Minister Manmohan Singh today said he expected normal monsoon rainfall this year to tame the soaring inflation. Under attack from the Opposition on price rise, he said good rains would help halve inflation to 6 per cent by December.

Stressing that the government had taken a number of steps to curb price rise ahead of what is expected to be a stormy Parliament session, he said: “With the normal monsoon, which is the expectation at present, the rate of inflation as regards food prices will abate in the second half of the year. We expect to see the rate of inflation in wholesale prices to come down to around 6 per cent by December.”

However, agriculture might not reach the target of four per cent by the end of the plan period in 2012 while power generation capacity would fall short of the envisaged 78,000 MW, the Prime Minister said. He was speaking at a meeting of the National Development Council (NDC). Agricultural performance is yet another important indicator of inclusiveness, he said, adding that agricultural growth was likely to be better than that in the 10th Plan, although it might not reach the target of 4 per cent.

“I would especially draw the attention of chief ministers to the Planning Commission’s assessment that agriculture is not receiving the priority it deserves,” he said, adding “this must be corrected.”

Monsoon accounts for around 80 per cent of rains India receives and is crucial considering more than half of the cultivated land is rain-fed. Two years of poor rains and drought has led to spiralling rise in food prices, the effect of which has now spread to manufactured goods.

After an initial shortfall this year, there seems to be a revival with monsoon prospects improving significantly last week. Rainfall was 16 per cent less than normal during this week, improving from a 24 per cent shortfall in the previous week. Agriculture Ministry officials say India’s key crop areas, including cane and grain-growing states, received good showers, boosting output prospects.

Meanwhile, the Prime Minister said the country’s gross domestic product was expected to expand by 8.1 per cent during the 11th Five Year Plan (2007-12) against the targeted nine per cent. “This is lower than the target of 9 per cent, but still the highest achieved in any plan period,” he said.

Economic growth is expected to be 8.5 per cent this fiscal.

The Prime Minister also called for special attention to protect environment, which, he said, was under threat from various sources.

“Air pollution, pollution of our rivers from untreated effluent discharge, erosion of forests in both area and quality; all these are challenges we must face. The threat of climate change also looms large, which requires a national action plan plus international action. How well we handle these problems, will determine whether our growth strategy is indeed sustainable,” he added.


FM promises to make up revenue losses

Finance Minister Pranab Mukherjee said states would be compensated for any loss resulting from the Goods and Services Tax ( GST) regime, which will subsume levies like excise, service tax, VAT and local levies like Octroi etc. from April next year.

This will, however, require a Constitutional amendment and a consensus between the states and the Centre is yet to be reached.

The FM has proposed a three-tier structure for the new, indirect tax regime--20 per cent for goods, 16 per cent for services and 12 per cent for essential items.





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