Mid term review says rising prices are still a cause for concern

The Centre projected a robust economic growth rate of well above 7 per cent in the current fiscal in the Mid Year Review (MYR) of the economy in 2009-10 while admitting that spiraling prices needed attention on “an urgent basis.”
The MYR tabled in Parliament by Finance Minister Pranab Mukherjee said the Economic Survey 2008-09 in July had projected Gross Domestic Product (GDP) growth could be around 7 per cent, with an allowance of 0.75 percentage points on either side.
“With the latest GDP data on Q2 (July-Sept) of 2009-10 being higher at 7.9 per cent, the growth outlook for the next two quarters and for the whole year is likely to be in the upper bound of the range predicted; and may even exceed it,” the review projected.
Monitor recovery process
The ministry claimed the fact that the country had managed to minimise the “knock-on” effects of global crisis due to “timely and appropriately calibrated policies” to register recovery in growth underscoring the “strong fundamental and resilience of the economy.” This also corroborated effectiveness of the (stimulus) policy measures undertaken to stall the adverse impact of the crisis.     Even as the MYR maintained that “the macro economic situation confirms signs of a turnaround for the economy” it cautioned that the government should monitor the recovery process in major sectors before exiting the stimulus packages provided to the industry to counter the impact of global slowdown.
The review cautioned that “the short run pressures on food prices are likely to persist because of the weak monsoon, which has affected the Khariff production of food grains.” While expressing optimism over growth momentum, the review has also flagged important issues needing attention.
Apart from urgent need to rein in inflation and boosting agro production these include the need to continue with the policy of opening up of capital account in “a gradual, sequenced and calibrated manner” to address the long-term financing need and at the same time guard against loss of competitiveness of exports.