The survey has indeed declared
that the economy has bounced
back from the global economic crisis and will grow by around 8.5%
in 2010-11, and may return to 9% mark in the next year, making India one of
fastest growing economies. But it has also expressed concerns over the
emergence of high double-digit food inflation,
especially since the second half of last year. It has opined that inflation scars
may spread to other items through wage increases and may lead to generalized
inflation. On a year-on-year basis, wholesale prices-based inflation in
December 2009 was 7.3%, while food inflation was 19.77%, with no signs of relenting,
thus risking a high inflation scenario for a sustained period. Common food
items and staples like potatoes, pulses, cereals, rice, sugar and milk led the
inflation chart, adding to the woes of the common man.
The survey has warned that the overall prices would move
northwards in the next few months—rising prices
of food and fuel as well as a pickup in manufacturing prices are soon
expected to push the headline inflation to 10%. An increase in excise duties may
help quell demand, but will also provide a further push to inflation. Another
cause for concern will be the fact that commodity prices are still hovering
below their peak, so any increase there will significantly worsen the
inflationary situation. And above all, rising
inflation could jeopardize the growth party by leading to a tight monetary
regime. Therefore, 8.5% growth in the coming fiscal might seem great, but a lot
will depend on how the government handles the sensitive issue of inflation.
Whatsoever, it is imperative that agricultural productivity and output will have to
be enhanced to meet the growth targets. The survey has called for `serious'
policy initiatives to achieve the targeted 4% growth in agriculture, which is key
to achieving an overall economic growth in excess of 9% and to bring some
respite on the food inflation front.
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