New Delhi, Feb. 27: Finance minister P. Chidambaram has his work cut out for tomorrow: the Union budget for 2007-08 must tame inflation, sustain growth and ensure the poor gets the spoils of growth.
Snuffing out inflation and spreading the benefits of growth among scheduled castes, scheduled tribes, minorities and women — the Congress’s traditional vote bank — is the top priority for the party especially after the reverses in the Punjab and Uttarakhand polls today.
Soon after the poll setbacks, Manmohan Singh told newspersons today that “we are trying to control inflation while stimulating the growth impulses in our economy.”
Singh’s views were similar to the concerns in the economic survey — the annual report card of the economy tabled in Parliament today by Chidambaram — which was emphatic on controlling inflation and pursuing an inclusive growth strategy.
“The economy appears to have decidedly ‘taken off’ and moved from a phase of moderate growth to a new phase of high growth,” the survey said. “However, there are some genuine concerns on the inflation front.”
Taking cue from the survey, Chidambaram said today that the government will continue to take steps to curb inflation. “We share the concern (of common man) on price rise.”
The survey said the country needs to step up supply of farm products and manufactured goods to “tame” inflation. “Pressure on inflation may persist because of a mismatch in supply and demand.”
Controlling inflation while keeping the growth story intact is possible, according to economists. Said S.P. Gupta, former member of the Planning Commission, “It’s a tough task but it's possible ... but along with growth getting an equity dividend will be tougher.”
The government’s gameplan is to straighten out the infrastructure bottlenecks. “Rapid growth in capacity additions through investments can avert the problem of capacity constraints,” the survey said.
A major area of concern is agriculture, which is expected to post just 2.7 per cent growth this fiscal.
“Poor agricultural performance, as the current year has demonstrated, can complicate the maintenance of price stability,” the survey said.
Chidambaram can take heart from the high tax collections this year which should help fund the expenditure plans of the government.