economic survey 2007- 08 presented by P. Chidamabaram

India's Economic Survey presented by the Indian finance minister P. Chidamabaram (Pic)has predicted a lower growth of 8.7 per cent for the fiscal 2007-08, while warning that rupee appreciation, lower export growth, rising inflation and US recession were posing major challenges.

The highlights of the Economic Survey 2007-08 presented by Finance Minister P. Chidamabaram in the Lok Sabha on 28th February:

• Indian economy to top $1 trillion this fiscal at market exchange rate
  Economy projected to grow 8.7 per cent in 2007-08
  Increased activity at stock markets, key indices giving returns of around 38 per cent
  Domestic investment and savings drive growth
  Inflation projected to decline to 4.1 per cent
  Fiscal deficit to decline to 3.3 per cent
  Revenue deficit to decline to 1.5 per cent
  Gross tax GDP ratio to rise to 11.8 per cent
  Revenue expenditure grows 17 percent, higher than target of 5.4 per cent
  Concern: infrastructure constraints
  Concern: slowdown in consumer goods sector
  Concern: loss of dynamism in agriculture and allied sectors
  Fundamentals continue to inspire confidence
  Investment climate full of optimism
  Concern: Rupee appreciation
  100 per cent foreign direct investment (FDI) in home appliances, rural agricultural banks
  51 per cent FDI in rural health
  Some FDI in retail trade
  Concern: Labour force growing faster than employment growth
  Challenge: Maintaining 9 per cent GDP growth

RBI keeps all key rates unchanged

• The Reserve Bank of India on Tuesday ,29 th January 2008 kept all key rates unchanged - a move that could dash hopes of any cut in lending rates by banks.
• Reviewing its monetary policy, the apex bank stuck to its projection of economic growth at 8.5 per cent, while declaring that the policy mechanism would endeavour to contain inflation rate close to five per cent in the current financial year.
• The cash reserve ratio stays and the CRR repo and reverse repo rates as well as the bank rates remain unchanged. The policy actually leaves flexibility to change repo and reverse rates in the near future. The Reverse repo rate stays at 6 per cent and CRR at 7.5 per cent. The inflation target for 07-08 also remains at 4 to 4.5 per cent levels and 3 per cent in medium term.
• The fact that RBI did not go in for sucking out liquidity from the banking system gives the comfort feeling that inflation is manageable.