Survey predicts 9% growth, but inflation a major worry

The Economic Survey has forecast 9% GDP growth in the next financial year as against 8.6% this year. The growth is largely due to improved savings and investment figures.

Inflation still remains the biggest cause for concern, the finance ministry’s annual report on the economy said. Other areas include the slowdown in foreign direct investments, a weakening balance of payments position, significant fiscal deficit and stagnation in agriculture.

The government is expected to withdraw the fiscal stimulus announced in 2008-09, the survey signalled. As a precursor to Monday’s budget, reforms were needed to streamline both land acquisition for industry and environmental clearances for infrastructure projects to sustain India’s growth momentum.

In a scathing attack on the government, the survey revealed that foodgrain diversion from ration shops was “too high” and the supply of rice and wheat would have to be doubled if the proposed National Food Security Act for the targeted group is implemented with the current delivery mechanism.

It also warned that agriculture growth needs to be at 8.5% next fiscal in order to achieve the 11th Plan target of an average 4% growth per year. The agriculture sector is expected to grow at 5.4% as per the 2010-11 advance estimates.