Mumbai, October 2:

India’s economy will expand by a robust 7.3 per cent in the current fiscal on the back of strong prospects of farm production and buoyant industrial and services sector performance, said a study report today. The improved southwest monsoon has aided the recovery in the progress of winter crop sowing leading to an improved production prospects for the fiscal year 2005-06, said the Confederation of Indian Industry’s (CII) economic report. According to the report, agriculture output is likely to grow at 3.2 per cent for the fiscal year 2005-06, a marked recovery from 1.1 per cent growth recorded in the previous fiscal year. The report stated a strong growth in non-food credit and growth in capital goods production and imports would support sustained growth for the industrial sector. Sectors that are pulling the growth rate down are crude petroleum, petroleum products and finished steel. The study expects the inflation rate to be on the higher side between five and 5.5 per cent projections due to rising crude oil prices. It is important at this stage to de-politicise the issue of hydrocarbon pricing by actually dismantling the administered price mechanism combined with a policy to make kerosene available at affordable prices, added the report.

“The Indian power sector is faced with problems related to inadequate capacity expansion, inefficiency of existing plants, transmission and distribution losses and bad financial health of state electricity boards.”