India is planning to increase the pace of economic growth in the coming years.
At a meeting Thursday to set out the future path of the country's economic policy, Prime Minister Manmohan Singh said India will set a target growth rate of nine to 9.5 percent from the year 2012 to 2017.
After a swift recovery from the global financial slowdown, India’s economy has been growing at a rate of about eight percent in the last two years. Companies have posted good profits and employment is growing from strong consumer demand for everything from cars to houses.
However, economists have warned that high inflation could slow down India's economic momentum, making it difficult to achieve the ambitious target of more than nine percent growth.
Government advisers admit that stubbornly high inflation poses a challenge. Despite efforts to slow rising prices, inflation remained at a higher than forecast nine percent in March.
The Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, says the government plans to tackle inflation by improving its fiscal balance. He says in the coming years, India aims to substantially cut its fiscal deficit, which is presently about five percent.
"We are working on the assumption that we will achieve this year’s fiscal deficit target of 4.6 per [percent], and then it will go down to 4.1. Then it will go down to 3.5, and in the year 2014-15 it will become three [percent] and then it will remain at three," Ahluwalia said.
Ahluwalia says that increasing farm output will also reduce pressure on rising prices and tame inflation. Food prices, which grew by nearly 18 percent last year, have contributed most to inflation in the past year.
Weather forecasters have said that monsoon rains, which are vital for farm productivity, will be normal this year. This has raised hopes that agricultural productivity will be on track, and food prices will not rise further.
India is Asia’s second fastest growing economy. Some analysts have said that in the coming years India could outpace China, which is the world’s fastest growing major economy.