Enthused by reforms and the strong fundamentals, the Economic Survey on Thursday predicted that India would bounce back to a high nine per cent growth in 2011-12 on the way to becoming world's fastest growing economy in four years.
The document, which assesses the state of the economy, warned that high food prices would rise further over next few months and criticised the food management policies that have led to "unacceptably" high prices of items like sugar.
Food inflation is at present hovering close to 18 per cent. The pre-budget Survey (2009-10), presented by Finance Minister Pranab Mukherjee in Parliament, also recommended a "gradual rollback" of stimulus measures after assessing the impact on each sector.
Projecting the economic growth to touch up to 8.75 per cent in 2010-11 and nine per cent in the next year, the Survey said: "It is entirely possible for India to move into the rarefied domain of double digit growth and even attempt to don the mantle" of the fastest growing economy in the world within the next four years.
It, however, expressed concern over rising prices, saying that a major concern during 2009-10 was the emergence of high double digit food inflation.
In a direct criticism of the government, particularly over the very high consumer price inflation, the Survey said that the "hype" over kharif crop failure without taking into account the comfortable food stocks and rabi prospects "may have exacerbated inflationary expectations encouraging hoarding and resulting in a higher inflation in food items. "... in the case of sugar, delay in the market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months," it added.
The Survey said that "since December 2009, there have been signs of these high food prices, together with the gradual hardening of non-administered fuel product prices, getting transmitted to other non-food items, thus creating some concerns about higher than anticipated generalised inflation over the next few months."
Referring to projection of 7.2 per cent growth of the economy in 2009-10, the Survey said, "The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis."
The board-based recovery, it added, "Creates scope for a gradual rollback, in due course of some of the measures undertaken over the last 15 to 18 months, as part of the policy response to the global slowdown."
These initiatives, it added, were also necessary for pushing the economy back on the growth path of 9 per cent, the rate at which the economy was expanding before the global crisis hit the world.
