Govt hopeful on growth, containing inflation

ECONOMIC SURVEY 2007-08

Amid downside risks to growth arising from a possible recession in the global economy, Finance Minister P Chidambaram today expressed optimism on achieving non-inflationary growth in 2008-09.

"I am optimistic about growth and containment of inflation in the coming year. It will be my priority to continue to provide a conducive investment climate and manage the macro economy to facilitate non-inflationary growth," Chidambaram told the media after placing the Economic Survey for 2007-08 in Parliament today.

Terming the outlook as "optimism, but with caution as the watchword", he said keeping inflation under control in an uncertain global environment would be one of the major challenges in 2008-09.

The high level of food, oil and other commodity prices in international markets pose risks to inflation. "There are a number of things going in favour of India. We need to capitalise on these opportunities while at the same time responding to the evolving situation in the global economy in a manner that our growth story is not affected," he added.

Chidambaram also said there was need to accelerate the pace of growth in agriculture on a sustained basis.

The higher economic growth trajectory and the projected growth of 8.7 per cent in 2007-08 is based on a quantum jump in savings and investment rates.

"Given this solid foundation of domestic investment and saving, we are confident of meeting the Eleventh Plan (2007-08 to 2011-12) target of 9 per cent average growth," he said.

"The macro-economic fundamentals continue to inspire confidence, which is reflected in the significant surge in capital inflows into the economy in the recent period, even when the global economy is showing distinct signs of slowing down", he added.

Buoyant growth of government revenues has made it possible to maintain fiscal consolidation as mandated under the Fiscal Responsibility and Budget Management Act.

Infrastructure needs to be augmented through public and private sectors by giving them incentive and motivation to perform at their best, he added.