Friday, June 13, 2008

Inflation to be manageable by September

by Jo Black

While inflation would fall to acceptable levels by September and manufacturing grow at double digit rates in 2nd year of 11th five year plan, infrastructure sector would receive Rs.4,20,000 crore of investment as a result of which infrastructure GDP spending ratio would go up to 9% in 11th plan from 5% in 10th plan, says Deputy Chairman, Planning Commission, Dr. Montek Singh Ahluwalia.

Delivering a keynote address at the ASSOCHAM organized Interactive Session with India Inc and its Vision 2020’, Dr. Ahluwalia also announced that the slowdown being witnessed by Indian Inc. would certainly end by the end of current calendar year as economic uncertainties of 2008 would have resolved themselves by then.

The Deputy Chairman, Planning Commission said that inflation was a serious concern and the short-term measures taken by the UPA government to tame it would start yielding results in next 4 months.

Dr. Ahluwalia said he agreed with the Prime Minister that the inflation would take a few more months before its settle down at acceptable levels.

Infrastructure sector in the 2nd year of 11th five year plan period (2008-09) would receive Rs.4200 billion ($100 billion) of investment to ensure that manufacturing sector grows at double digit rate as in the first year of 11th five year plan, i.e. 2007-08, this sector received a substantial investment, said Dr. Ahluwalia.

Referring to the GDP growth, Dr. Ahluwalia said that the GDP for fiscal 2007-08 would be higher than the officially projected levels of 8% plus as agricultural production which increased in the recent months has not been taken into account in the revised GDP projections.

In the next few weeks, the latest recorded grain production of wheat when taken into official account, the GDP growth projections would exceed more than 8.5%, said the Dy. Chairman, Planning Commission.

He exuded confidence that food grains production during the 11th five year plan period would accelerate by 2.5% each year with the available technologies at disposal of farmers and result into higher soil and land fertility and therefore, food grains stock would not suffer.

This would be reflected in the overall GDP growth which in view of the Planning Commission would remain around 9% if not above, said Dr. Ahluwalia.

According to him, if India is able to grow at an average GDP rate of 7% for next 20 years consecutively, its economy would be described as developed world, and India would fall into the bracket of few such economies which should not be a difficult and ambitious target.

Dr. Ahluwalia said that more than adequate emphasis was being placed on agriculture so that it grows at 4% in the 11th five year plan period.

With agriculture growing at 4%, the manufacturing sector would conveniently record double digit growth as the contribution of agriculture would be reflected into it, particularly when lot of emphasis is being placed on infrastructure development.

He also said that beyond the 11th five year plan period, the government would evolve a new mechanism so that health, education, energy and water sectors receive a lot of attention.

The growth of education sector would be taken to 21% so that employment is generated in a fashion to remove poverty.

 

 

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