Indian income to double in decade says FM

New Delhi, Feb 28: Exuding cautious optimism on economic outlook for 2007-08 with a projected growth of 8.7 per cent, Finance Minister P Chidambaram today said average income of an Indian would double in a decade if per capita GDP at market price grows at an average of 7.2 per cent per year.

In a statement after tabling Economic Survey in Parliament, he said the Indian economy averaged yearly growth of 8.7 per cent during five years to 2007-08, indicating stability and sustainability. This, he said, is also reflected in a near doubling of the pace at which the average income of people is growing.

''If the rate of growth of per capita GDP continues at the five year average of 7.2 per cent per year, average income would now double in a decade instead of a generation or more, earlier.'' The Finance Minister said condition of common man has improved as reflected in a near doubling of the rate of growth of per capita private consumption to 5.1 per cent per annum from 2.6 per cent in the previous 11 years.

While projecting growth of 8.7 per cent in 2007-08 on the basis of investment of 35.9 per cent and savings of 34.8 per cent of GDP in 2006-07, he said the government is confident of meeting the 11th Plan (2007-08 to 2011-12) target of 9 per cent average growth.

Mr Chidambaram said surge in capital inflows into the Indian economy in spite of slow down in the world economy indicates optimism on investment front.

He said inflation has been controlled and after declining to less than 4 per cent in August 2007 it has remained below it for 23 consecutive weeks since. But he cautioned that risks remains in view of high food, oil and other commodity prices in international markets.

''Thus keeping inflation under control in an uncertain global environment will be one of the major challenges in 2008-09.'' But he said he is optimistic about growth and containing inflation in the coming year.

The Finance Minister said he will continue to provide a conducive investment climate and manage macro economy to facilitate non-inflationary growth. However, he also pointed to downside risks to growth arising from slow down and possible recession in the global economy.

Listing agriculture, infrastructure, education and skill development among several challenges to inclusive growth, he said while manufacturing and services continued to grow broadly, agriculture remains an area of concern. He emphasised need to accelerate agriculture growth on a sustained basis.

Accepting that demand for infrastructure services has grown faster than supply, he said it is imperative to augment and upgrade infrastructure both physical and social.

He also called for harnessing the country's demographic potential through inclusive growth by providing basic education and skills needed in the job market.

UNI