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ECONOMIC SURVEY PEGS GROWTH at 9%

Updated on Friday, February 25, 2011, 17:20 Print Email
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Zeebiz Bureau

New Delhi, February 25: The Economic Survey 2010-11, tabled by Finance Minister Pranab Mukherjee in Parliament Friday, indicated that India will continue on the high growth trajectory, but inflation would remain a major area of concern. The Survey pegged India to top 9% growth of GDP in FY12.

Emphasizing on the need for persistent ant-inflationary measures, the Survey found that food prices will drive inflation, which will also be affected by crude rates escalation owing to the uncertainty in the Middle East.

Observing that Indian agriculture is at a "crossroads", the Economic Survey called for a second Green Revolution with newer technological breakthroughs and higher investment in the sector.

The Survey felt a need to fasten the pace of reform, as well as to deepen capital markets. The government has indicated that it was taking a series of measure for regulatory overhauls to better safeguard the financial sector.

There will be a gradual roll-back of the economic stimulus but outlook for medium term growth looks promising.

The following are the main highlights of the Economic Survey:

Growth
  • Indian economy to grow 8.75 -9.75% in FY12
  • Expect Indian economy to top 9% growth rate FY12
  • Maintaining growth with price stability key challenge
  • Seeing fast, strong turnaround in Indian economy
  • India growth likely to revert to pre-crisis level FY12
  • Expect India’s economic growth to pick up medium-term
  • FY11 GDP growth relatively broad-based
  • Monson, crude prices pose risk to economic growth
  • Probability of second-dip recession very low


Food Prices
  • Food Price, demand pressure to drive inflation outlook
  • Maintaining growth with price stability key challenge
  • High food prices driven by demand factors
  • Higher FY11 farm growth to help ease food prices
  • Rising purchasing power aiding spurt in food prices


Inflation
  • Inflation is clearly a dominant concern
  • Current Trends Warrant Anti-Inflationary Monetary Stance
  • Inflation may stay elevated on West Asia Crisis
  • Food price, demand pressure to drive inflation outlook
  • Inflation largely driven by food items
  • High food prices driven by demand factors
  • Inflation pressure seen exacerbated by global prices
  • Rising purchasing power aiding spurt in food prices
  • Economic recovery triggered demand-side pressure in economy
  • Inflation pressures from both domestic, global factors
  • Core inflation suggests inflation now generalised
  • Need to prevent inflation slipping into core sector
  • Food inflation stubbornly in double- digits
  • Inflation likely to moderate on fiscal, monetary steps
  • Committed to provide cooking fuel at affordable price
  • Plan to increase diesel prices in staggered manner
  • Government to cap auto fuel prices if crude oil spurts
  • April-December average inflation of 9.4% highest in 10 years
  • High food inflation not unique to India
  • Inflation significantly above RBI’s comfort level
  • Need to be vigilant against demand-side pressures
  • Grain release in batches, not bulk, to tame inflation
  • High food inflation “dark cloud” on Indian economy


Agriculture
  • Need to review grain release, procurement policies
  • Don’t want total reliance on import to beat shortages
  • Ample scope for improvement in grain release policy
  • Grain release in batches, not bulk, to tame inflation
  • Urgent need to expand storage space, facilities
  • Need to plug PDS slippages to expand, improve coverage
  • Smart card, coupons to help target food subsidy better
  • Favours smart cards also for kerosene, fertilizer subsidy
  • Farm sector seen accounting for 14.2% of GDP FY11
  • Farm sector expected to post 5.4% growth FY11
  • Average farm growth seen 2.87% in first 4 year of 11th Plan
  • Need 8.5% farm growth FY12 to meet 11th plan aim of 4%
  • Wheat, pulses, cotton output seen record high this year
  • Crop output seen up this year despite erratic weather
  • Need to improve crop yield for long-term output growth
  • Crop yields have plateaued in wheat, rice
  • Need breakthrough in pulses output to meet high demand
  • FY11 urea output seen 21.5 mn tn vs 21.1 mn year ago
  • FY11 DAP output seen 3.96 mn tn vs 4.25 mn year ago
  • FY11 complex fertilizer seen 9.7 mn tn vs 8.04 mn year ago
  • High crop support prices put fiscal strain on economy
  • FY11 natural rubber output seen 851,000 tn, up 1.9 %
  • Current edible oil import duties to continue till September
  • Need to encourage cold chain, food processing invest
  • Balancing concerns of farmers, consumers a challenge
  • Efficient food stock management needs urgent attention
  • Need storage, transport, supply infra for farm produce
  • Government mulling ways to revive closed urea unites
  • Government mulling revamp of Madras fertilizers
  • Taking steps to restrict export of all fertilizers


Industry
  • Industrial output grows by 8.6 per cent
  • Manufacturing sector registers 9.1% expansion
  • Exports up by 29.5% in April-December, 2010.
  • Deceleration in industrial output cause for concern
  • Slowdown in industrial growth seen temporary
  • Medium-term industrial growth prospect seen positive
  • Plan to increase diesel prices in staggered manner
  • Government to cap auto fuel prices if crude oil spurts


Banking, Financial Institutions
  • Minimum capital requirement for banks should be graded
  • Two types of banking licences could be considered
  • May mull separate licence for basic, full banking services


Fiscal
  • Centre’s fiscal broadly on consolidation track April-December
  • India FY11 fiscal gap seen 4.8% on higher GDP base
  • India FY11 revenue gap seen 3.8% of GDP
  • Current account gap likely to moderate on export spurt
  • Need to lower fiscal deficit
  • Liquidity crunch mainly due to large government cash balance
  • Need more proactive fiscal steps to eradicate poverty
  • Favours smart cards also for kerosene, fertiliser subsidy
  • Buoyant tax revenue key driver of fiscal consolidation
  • Rise in corporate, service tax mop-up noteworthy
  • Prospects of revenue-led fiscal consolidation bright
  • Better subsidy targeting improving fiscal management
  • Direct Taxes Code proposed to be launched April 2012
  • Tax buoyancy, 3G auction brightened FY11 fiscal health
  • States likely to be back on fiscal consolidation FY 12
  • States’ consensus on GST yet to be achieved
  • Deepening reforms key to sustain fiscal consolidation
  • Rapid lowering of fiscal deficit needed


Monetary
  • Need persistent anti-inflation monetary stance
  • Government implementing gradual exit from stimulus
  • Liquidity management major challenge for RBI
  • Excessive cash crunch makes credit delivery difficult
  • Need G20 co-operation to manage FX flow volatility
  • RBI FX market intervention unlikely to be inflationary
  • Don’t want total reliance on import to beat shortages
  • Need to keep all options open if Fx flows hurt economy


Capital Investment
  • Need to deepen capital markets
  • To Make Efforts To Attract More FDI
  • Keeping Options Open On Managing Capital Inflows
  • Sluggish” bureaucracy impeding FDI inflows


External
  • Economic uncertainty prevails in Europe, US
  • Probability of second-dip recession very low
  • Need to keep all options open if FX flows hurt economy
  • Slowdown in FDI partly offset spurt in FII investment
  • Need G20 co-operation to manage FX flow volatility
  • RBI FX market intervention unlikely to be inflationary
  • “Sluggish” bureaucracy impeding FDI inflows


Markets
  • Need to deepen capital markets
  • Commodity in futures turnover up on better participation
  • Commodity futures revenue up also on high global prices
  • Need to deepen non-bank FI’s role in corporate bond, debt market


Other Highlights
  • Tax buoyancy, 3G auction brightened FY11 fiscal health
  • Govt On Track To Reduce Debt-To-GDP Ratio To 68.7% By 2013-14
  • Accelerated investment needed in infrastructure; growth laudable in telecom, services sectors
  • Narrow Fiscal Deficit To Allow Higher Loans To Fund Growth
  • Survey Echoes Fiscal Rigour, Cautions Inflation Risk


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we hv all seen pranab mukherjee losing his temper because of high BP.Manmohan NIKKAMMA singh has had a bypass. That is the state of our economy.
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economic survery of india? We also need Rail survey of india.
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this is going to be anti industry budget
Ash - Delhi
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