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PM’s council pegs growth at 7.2%
Published on 20 Feb. 2010 12:05 AM IST
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Advocating caution while withdrawing fiscal stimuli, the Prime Minister’s Economic Advisory Council Friday pegged India’s growth for this fiscal at 7.2 percent, accelerating to 8.2 percent and 9 percent, respectively, in the next two years. In its review of the Indian economy presented to Prime Minister Manmohan Singh, just a week ahead of the national budget for next fiscal, the council said while high fiscal deficit was untenable and demanded immediate correction, the funds for infrastructure must not be curtailed. Otherwise, the 43-page report was optimistic on the performance of the Indian economy, particularly drawing comfort from a better-than-expected rebound of industrial output, even as high inflation on account of food prices remained a major concern. “The council expects a bounce back in agricultural gross domestic product in the next year and maintenance of the desired trend growth of 4 percent in 2011-12,” council chairman C. Rangarajan said at a press conference here to unveil the review. The council also expected the industrial and service sectors to continue to register strong growth through both these years and hoped the government’s priorities and initiatives on infrastructure would proceed along desired lines. “On this basis, we are making an initial estimate that the economy would grow by 8.2 percent in 2010-11 and by 9 percent in 2011-12,” said Rangarajan, after presenting the review to the government. The council also noted with concern the price movements in the current fiscal that has resulted in very high rates of inflation in food products, both primary articles and manufactured items. “The critical component of the inflationary process in the current fiscal derives from primary food and sugar. Within primary food, goods that have exhibited the highest rate of inflation are foodgrain -- pulses, wheat, rice, in that order, and sugar in the manufactured category.” The council also took note of the upward revision in the annual inflation rate outlook of the RBI to 8.5 percent for this fiscal.

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