Returning to a high growth rate is the greatest challenge facing India, with a weak monsoon making the task harder, but the economy may improve by year-end, Prime Minister Manmohan Singh said in his Independence Day speech. India's economy is likely to grow by 6.5-7 percent in the year to March 2010, a top policy adviser said this week, matching the 6.7 percent growth in 2008/09, and well below the growth rates of 9 percent or more in the previous three years.
"Restoring our growth rate to 9 percent is the greatest challenge we face," Singh said in his annual address from the ramparts of Delhi's historic Red Fort. "We expect that there will be an improvement in the situation by the end of this year," he said, after unfurling the Indian tricolour to the sound of the ceremonial 21-gun salute.
Monsoon rains in India, Asia's third-largest economy, are 29 percent below average so far, raising concerns of weaker farm output and inflation. Economists say a bad monsoon could knock as much as 2 percentage points off growth. But India has adequate stocks of foodgrains, and the government will keep food prices in check, Singh said.
"All efforts will be made to control rising prices of foodgrains, pulses and other goods of daily use," he said, speaking from behind a bullet-proof enclosure. "The goal is 4 percent annual growth in agriculture, and I am confident it will be achieved in the next five years," he said.
Singh, leading the Congress party coalition for a second term after a decisive election victory in May, also called for calm in dealing with the H1N1 pandemic, which has muted celebrations of the 63rd anniversary of India's independence from British rule. Security was tight across the country, with tensions high with old rival Pakistan, triggered by last November's attacks in Mumbai that India has blamed on Lashkar-e-Taiba.
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