What the Economic Survey is likely to say

The robust performance of the Indian economy during the ongoing fiscal is likely to prompt the government to peg GDP growth in the 2011-12 fiscal at 9 per cent, as well as withdraw stimulus measures in the forthcoming Budget.

The Economic Survey 2010-11, to be tabled by Finance Ministry Pranab Mukherjee on Friday, is likely to highlight food inflation and the slow recovery in the Euro zone as areas of concern for the domestic economy.

Sources said the Economic Survey will also make a strong case for pushing economic reforms, especially raising caps on foreign direct investment, with a view to achieving a high growth rate on a sustained basis.

. . . 

In her address to Parliament earlier in the week, President Pratibha Patil had said, "There is no room for complacency. We have to maintain the momentum for reforms on a wide front."

She had also underlined the need for making "the domestic environment more conducive to investment, encouraging public as well as private investment and domestic as well as foreign investment, particularly foreign direct investment."

The Economic Survey, which is tabled in Parliament ahead of the General Budget, is likely to peg the economic growth rate in the current fiscal at 8.6 per cent, up from 8 per cent a year ago.

. . . 

The economy recorded a growth rate of 8 per cent in 2009-10, indicating that it has recovered faster from the impact of the global financial meltdown than anticipated earlier.

In the aftermath of the global crisis, the growth rate slipped to 6.8 per cent in 2008-09 from over 9 per cent in the three preceding years.

The Prime Minister's Economic Advisory Council and the World Bank have said that India's growth rate will revert to the pre-crisis level of 9 per cent in the next fiscal.

. . . 

In view of the recovery, the Economic Survey is likely to underline the need for getting back on the path of fiscal consolidation by withdrawing the stimulus that was provided to industry to combat the impact of global crisis.

The PMEAC had also suggested withdrawal of the stimulus, which was provided to the industry in the form of tax concessions and a hike in public expenditure.

The series of stimulus packages, however, pushed the fiscal deficit of the government up to 6.3 per cent of the GDP in 2009-10.

In the current financial year, according to the PMEAC, the fiscal deficit is expected to slide to 5.2 per cent from the earlier estimate of 5.5 per cent.

. . . 

Inflation, however, will continue to be a problem area in view of the rising crude oil and commodity prices in the global market.

Following the civilian uprising in the Middle East, crude oil prices have already crossed $105 per barrel.

In a recent report, the World Bank said that rising commodity prices have pushed 44 million people in developing countries into poverty.

. . . 

The Economic Survey is likely to suggest concerted efforts to increase agricultural productivity to deal with the menace of rising food prices.

Food inflation soared to 18.23 per cent in December, before moderating to 11.05 per cent in February. Headline inflation, however, continues to be above 8 per cent.

A sharp rise was also witnessed in prices of onion and other vegetables during the year, though some moderation was seen in the case of sugar, wheat and pulses.

. . . 

Among other things, the Economic Survey is likely to raise issues concerning infrastructure development, the rising Current Account Deficit, excessive inflows of portfolio investment, deceleration of foreign direct investment and also the need to push exports.

As the government plans to double investment in the infrastructure sector to $1 trillion in the 12th Five-Year Plan (2012-17), it will be necessary to streamline policies to attract private and foreign investment as well.