Posted on 22 Oct 2009
"On the whole we must say that the Indian economy has weathered the international economic crisis vey well," said C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
The council in its annual report said capital inflows have revived, and projects them to reach $57.3 billion this fiscal year from $9.1 billion last year. It forecasts industrial output to grow 8.2 percent, up from 3.9 percent last year.
The report's outlook for
Food inflation and a growing government budget deficit, however, remain serious concerns for
"The one disturbing element in the Indian economy is the behavior of inflation," Rangarajan said. If inflation becomes very bad by year's end, "the stance of monetary policy will have to change from its highly accommodating position," he said.
The total fiscal deficit will likely hit 10.1 percent of gross domestic product this fiscal, up from 8.6 percent last year and far higher than government targets.
The cost of primary food articles has shot up by a third, the report said, and the benchmark inflation rate is expected to reach 6 percent by March, higher than the central bank's July prediction of 5 percent.
The 22.7 percent shortfall in the summer monsoon rains will likely drive a 2 percent contraction in agricultural output, the report said.
Projected food grain production is 223 million tons, down from 234 million tons last fiscal year.
The report said economic growth is unlikely to drop below 6.25 percent but could reach 6.75 percent.
