Economic Survey pegs GDP growth at 8.1 pc ; outlines reform agenda

New Delhi, Feb 27 (UNI) The Economic Survey 2005-06 tabled today in Parliament projects a growth rate of 8.1 per cent in 2005-06 and calls for deepening of the Reform process in regard to taxation, industrial and labour policies and stresses the need for fiscal consolidation and "rapid and bold policy response" in the hydrocarbon sector in view of the threat of lingering oil crisis.

The annual point to point inflation rate is likely to remain around five per cent at the end of March, 2006 though the Survey highlights the upward pressure on the interest rates arising from continuing volatility in energy prices.

Discounting uncertainty associated with high and volatile international petroleum prices, the survey said the near and medium-term inflation risks in the Indian economy were manageable.

'' The danger of an unprecedented price increase is ever-present.

However, given sufficient foreign exchange reserves and the goverment's commitment to further trade and tariff reforms,strict fiscal prudence, monetary discipline and orderly movement of the exchange rate of rupee, the annual inflation rate in terms of both wholesale and consumer price indices is likely to witness declining trend in the medium term and remain within tolerable limits''.

The survey was tabled in both Houses of Parliament by Finance Minister P Chidambaram.

The survey makes out a strong case for providing continued thrust to improving the infrastructure and the agricultral sectors to put the latter on a sustained growth path of four per cent per annum up from the expected level of 2.3 per cent in 2005-06.

Prospects of agriculture production in 2005-06 are reasonably bright due to near normal Monsoon. It is expected that the foodgrains production may increase to 209 million tonnes in 2005-06.

A distinct bias in agriculture price support policy in favour of foodgrains in the past has distorted cropping pattern and input usage and would require corrections. It says market for farm output continues to depend heavily on expensive government procurement and distribution system. A shift from the current Minimum Support Price and Public Procurement System and developing alternative product market was essential for crop diversification and broadbased agriculture development.

Painting a buoyant picture of the economy, the survey says, ''The odds are loaded heavily in favour of a continuation of the growth momentum observed in the last three years. A virtuous cycle of growth and savings, that appears to be already underway, is likely to continue for some years to come.'' ''The growth trend for the last three years appears to indicate beginning of a new phase of cyclical upswing from 2003-04,'' it says.

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