New Delhi, February 27:

India’s economy has ‘taken off’ but rising prices are a key worry, the government said on Tuesday, a day before the release of the national budget expected to contain inflation-fighting measures.

Economists have expressed concern about India’s economy overheating with growth running at more than nine per cent and inflation near two-year highs.

“The economy appears to have decidedly taken off and moved from a phase of moderate growth to a new phase of high growth,” the finance ministry said in its annual report card on the economy.

“However, there are some genuine concerns on the inflation front,” said the economic survey released by Finance Minister P Chidambaram in parliament.

The upbeat report came a day ahead of the annual budget expected to highlight measures to contain inflation as the ruling Congress government faces a slew of state elections in which rising prices have emerged as a major issue.

The state elections are seen as a dress rehearsal for federal polls which must be held by May 2009.

“We share the concern (over inflation) and we have taken a number of steps to moderate prices and we will continue to take steps,” Chidambaram said outside parliament.

Inflation fell back to 6.63 per cent last week from a two-year high of 6.73 per cent earlier in the month but remains far above the central bank’s tolerance level of 5.0 to 5.5 per cent.

The price rises, driven by rises in the cost of food and raw materials, have especially hurt

India’s poor masses who helped bring Congress to power in 2004.