The Indian economy is expected to register a growth rate of 8.6% in 2010-11, while it is likely to touch 9% next fiscal, driven by buoyancy in the agriculture sector, the Economic Survey tabled in the Parliament on Friday said.
The agriculture sector is set to register a growth rate of about 5.4% in 2010-11, the survey said.
However, high food inflation continues to be a cause for concern. Besides, rising commodity prices and volatility in global commodity markets will also have to be taken into account, which also underline the need for fiscal consolidation and stronger reserves, the survey highlighted.
It has called for efficient taxation of goods and services by a new GST, which is expected to raise revenues and strengthen fiscal consolidation. There is also a strong need to accelerate the financial inclusion programme.
According to the survey, industrial output growth rate is set to be 8.6%, while the manufacturing sector is likely to register a growth rate of 9.1% in 2010-11.
Fiscal deficit is likely to be 4.8% of GDP in 2010-11 against 6.3% of GDP in 2009-10, it highlighted.
The economic survey also said the country's economic growth is expected to be faster in next two years. The economy is poised to grow despite risks of global events like volatility in commodity prices, exacerbated by political turmoil in the middle east, according to the Economic Survey.
The Survey for 2010-11, has pegged the growth for the current fiscal, helped by a broad based rebound in agriculture and "continued momentum" in manufacturing and private services.
Inflation, an area of concern which acts as a road block for growth, is expected to be 1.5% higher than projected earlier, it said.
Food inflation, in particular, has come as major challenge for the economy.
Prime Minister Manmohan Singh had said on Thursday that general inflation would come down to 7% by March end, from more than 8% now.
Days ahead of the general budget, the Survey indicated the need for fiscal consolidation. "Food inflation, higher commodity prices and volatility in global commodity markets have been a cause of concern underscoring the need of fiscal consolidation and stronger reserves," it said.