“Going by impressive recovery of the industrial sector and investment… and considering that agriculture had a set-back in 2009-10 and is only gradually getting back to the projected path, the Indian economy is expected to grow around 8.5 during 2010-11 and to breach the 9 per cent mark in 2011-12,” Finance Minister Pranab Mukherjee said while initiating discussions on the Finance Bill, 2010 in the Lok Sabha.

The outlook is further brightened by the fact that a normal monsoon is predicted this year, he said. The upward shift in the growth trajectory has been anchored strongly in robust growth in consumption, he noted. Referring to the spurt in inflation, almost touching double inflation, Mukherjee admitted said: “the most worrisome feature of the economy is inflation, which agitates the house and people outside the house. I share your concern.” However, he observed “prices of essential commodities have started softening and food inflation will decline in the coming months.”

Turning to broader economic issues he expressed the commitment of the government to continue with the fiscal consolidation programme and gradually reduce the fiscal deficit to 4.5 per cent of the GDP in 2011-12 and 4.1 per cent 2012-13.

Committed to tax reforms
Meanwhile, unveiling the roadmap for the proposed tax reforms he asserted that the Centre was firmly committed to the goal of comprehensive tax reform through the introduction of the Direct Taxes Code (DTC) and Goods and Services Tax (GST).
“In the case of DTC, the process of consultation with stakeholders for revising the first draft is almost over. We expect to place a revised discussion paper in the public domain by next month,” he said, adding “after a quick round of consultations with some of the major stakeholders, we should be able to submit the draft legislation to Parliament in the Monsoon session.”

In regard to GST he said the government was closely engaged with the Empowered Committee of the State Finance Ministers in finalising the GST design. “Some of the States apprehend that they may lose some revenue in the initial years of the GST regime. Centre is willing to provide compensation to the states for these initial years,” he said.