The Economic Survey, considered to be an analytical report of the government, outlined several concerns like impact of US sub-prime crisis, loss of dynamism in agriculture, appreciating rupee eroding India's export competitiveness, deceleration in industrial growth and managing capital inflows. The Economic Survey said inflationary impact of foreign funds flow, a slowdown in the US, an appreciating rupee and sluggish infrastructure sector were major challenges before economy that is projected to slow down to 8.7 per cent in 2007-08.
"The new challenge is to maintain growth at these levels, not to speak of raising it further to double digit levels," the Survey, a report card on the economy, presented in Parliament on Thursday, said.
The Economic Survey said there is an urgent need for a regime that supports predictable user charges, a financial system that allocates risk efficiently.
The document stated that the recent hike in fuel prices would add 19 basis points to the inflation rate projected at 4.4 per cent for the year 2007-08.
"Of late, the change in the structure of the economy and its more globalised nature has made management of inflation a complex task," it said, adding that the rising capital inflows will require monetary policy to play a more decisive role.