Upbeat Mood Prevails Before Survey

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[India is still shining &mdash; and the numbers that finance minister P. Chidambaram will serve in his pre-budget economic survey before Parliament are likely to reflect just that. After posting a scorching 9.6 per cent rate of economic growth in 2006-07, the Indian growth story was seen slowing down in 2007-08. High interest rates, which curbed fresh investments and consumer buying, along with fewer export orders for the booming software, textiles and gems and jewellery sectors because of a slowdown in the US, tempered growth. But a booming internal market for goods, ranging from mobile phones to trucks and driven by a fast expanding middle class, which for the fifth year running enjoyed the world&rsquo;s highest salary increase of about 15.1 per cent, is likely to see growth at close to the 9-per-cent mark in this fiscal. The survey is likely to be upbeat on the performance of the economy, despite the sub-prime chill in the US. This should cheer up the Congress, which has suffered electoral reverses recently. The survey should be complemented by the finance minister reporting better fiscal numbers, thanks to the burgeoning tax kitty which could hit the Rs 6-lakh-crore mark. The country&rsquo;s manufacturing sector is expected to expand by around 9.5 per cent in this fiscal. Agricultural output may grow by over 2.6 per cent, and financial services is expected to advance by nearly 12 per cent. According to S.P. Gupta, former member of the Planning Commission, &ldquo;India&rsquo;s economy has had a long success story, and it is reflected by today&rsquo;s numbers. But there are future downsides. &ldquo;If the US subprime crisis deepens, it can create problems for all Asian economies. An oil-price-led inflationary pressure can neither be ruled out,&rdquo; he said. Investment banker Goldman Sachs is also wary of the downsides. It says India&rsquo;s economy is expected to slow down to just below 8 per cent in the coming year, mainly on account of possible global pressures. Most bankers expect Chidambaram to give tax sops to prop up sectors, under pressure from the global slowdown. Firms have also been constrained by the Reserve Bank of India&rsquo;s moves to hold on to a high interest rate regime to control demand and prices. Amit Bannerjee, head of research at a state-run bank, said the government might meet its fiscal deficit target of 3.3 per cent of the gross domestic product. This is because of the impressive tax collection figures, including a 40 per cent increase in the income tax mopup. Many analysts believe the government can even better the deficit target, given the high revenue streams. However, the target excludes the deficits of state governments. It also ignores off-balancesheet items, such as oil bonds issued to bridge a widening gap between global crude prices and more-or-less-stable domestic prices of petroleum products. Economists such as Gupta warn that instead of creating euphoria over high growth, the government should use the findings of the survey to propagate a more inclusive growth strategy. Indirect tax Chidambaram today expressed optimism that indirect tax collections would exceed the budget target of over Rs 2,79,000 crore for the current fiscal, even though growth in excise duty was a matter of concern. The finance minister said indirect tax collections exceeded the budget targets by Rs 8,615 crore in the 2005-06 fiscal, while in 2006-07, they surpassed the targets by Rs 11,300 crore. &ldquo;I am confident that the budget targets (for indirect tax collections) would exceed this year, too,&rdquo; he said here. Courtesy: The Telegraph