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Finance Minister Tables Economic Survey in Parliament

The Annual Economic Survey has been tabled in Parliament on Thursday. The survey predicts that around 7 to 7.5% growth is possible this year. The survey suggest that India needs to watch out for inflation.

The economic survey 2008-09 provides a complete assessment of Indian economy as well as outlines the problems that are being faced by the country. The survey report also suggests measures to deal with these problems.


Decontrol Petrol and Diesel Prices, says Economic Survey

It is high time that petrol and diesel prices were decontrolled taking advantage of low inflation and global crude prices, the Economic Survey said, while criticising the government for its ''imperfect'' handling of oil price hike.

The Survey made suggestions for sweeping reforms in the energy sector, including limiting subsidised cooking gas to domestic consumers to 6-8 cylinders per year.

Coming a day after the government announced an ad-hoc increase in petrol price by Rs four a litre and diesel by Rs two per litre that effectively buried all hopes of freeing auto fuel prices, the pre-Budget Survey said the entire rise in raw material price should be passed on to consumers.

The doubling of international crude oil prices to USD 70 a barrel since December had warranted Rs 5.82 a litre increase in petrol and Rs 3.62 per litre hike in diesel rates.

In practice, the issues of prices were addressed somewhat "imperfectly" through a sharing formula that represented a mix of government subsidy, taxation of rents and some pass through, the Survey decried.

State oil retailers should be given freedom to fix rates of diesel - the most used fuel in the country that is commonly used in agriculture - till such time that crude oil price is below USD 80 a barrel. For petrol it set no such ceiling.

When prices cross USD 80 a barrel, a measured policy response system and financial buffer should set in to insulate the farmers and truckers from abnormally high rates, said the Survey, which was tabled in Parliament today.

Calling for reforms in petroleum subsidies to reduce leakages and ensure targeting, the Survey said: "Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household. Phase out Kerosene supply-subsidy by ensuring that every rural household (without electricity and LPG connection) has a solar cooker and solar lantern."

The Survey also said the rise in global oil prices in 2008 - some of which was permanent and some temporary - had a strong adverse impact on the balance of trade. "Ideally, the entire permanent element of the price rise should be passed through along with part of the temporary increase.

It said the shaving-off of over USD 100 a barrel from the historic rise in international crude oil prices to USD 147 a barrel in July 2008, was expected to be a temporary.


Economic Growth for 2008-09 Drops By 2.1% to 6.7%

The pre-budget economic survey states that the economic growth for year 2008-09 falls from 8.8% to 6.7%. The growth rate dropped by 2.1% indicating the impact of the global economic crisis. The report also observed that even the bank credit has not been at a satisfactory level.

Expressing concern over the increasing rates of commodities and current prices of essential articles, the government has expressed the need to make sweeping reforms. The economic survey that is prepared by the finance ministry said that inflation is no longer a worry. It also called for an urgent return to the targeted fiscal deficit of 3%.