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| Prices aren't coming down soon: Economic Survey | | More bad news for Govt | |
BL KAK
NEW DELHI, FEB. 27
The Economic Survey for 2006-07, tabled in Parliament on Tuesday by Finance Minister, P Chidambaram, portrays a dismal picture of prices of essential commodities. It seems that there is more bad news for the Congress-led coaliton government at the Centre as the survey says that prices are not coming down soon.
The survey suggested that the government should brace up for a bout of sustained inflation. Unless supply of essentials is increased, prices will not be tamed, the official document warned. However the good news is that the economy has decidedly taken off to a higher growth phase. It needs to be sustained without upping inflation.
The survey cautioned that a quick fire solution to shoot inflation was difficult, and it asked the government to calibrate policies to ensure a high nine per cent growth and arrest prices. The economic survey said: "Finding immediate answers to inflation induced by commodity-specific supply shortfall is difficult. The fight against inflation has to be calibrated without compromising growth".
The survey also said that sustaining and managing the growth would remain its priority area. It indicated: "A sense of optimism characterises the current economic conjuncture. Fostering the momentum of growth continues to be a top priority". The report said that the country must not lose its nerve over the economy's rapid growth, saying the momentum is sustainable even though containing inflation would be a challenge.
Analysts expect more steps to cool price pressures, with inflation running at a two-year high and the economy expanding at its fastest pace in 18 years. The economy is estimated to grow 9.2 per cent in the fiscal year to March 31, raising concerns it is overheating as infrastructure fails to keep pace with rising domestic demand. The Finance Ministry said in its annual economic survey for 2006-07, preceding a Budget presentation on Wednesday, that economic fundamentals were robust and the outlook for Asia's fourth-largest economy was upbeat.
The highlights of the economic survey are: GDP to grow 9.2 per cent, touch Rs 28,44,000 crore in 2006-07; inflation at 6.7 per cent on February 3 a matter of concern; superfast surcharge levied on second class tickets reduced by 20 per cent; and growth without high inflation is government's top priority. Chidambaram's report talked of the following priorites: Making growth inclusive; improving government intervention in critcal areas such as education and health; and subsidies to be targeted.
Acording to the economic survey, infrastructure will require 320 billion dollars in the 11th Five Year Plan. Public sector will fund 60 per cent of infrastructure. The report said that personal income tax mop up rose 30. 3 per cent in April-December financial year 2007.
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