Despite signs of recovery from the global financial crisis, the GDP growth rate for theIndian economy is likely to be between 5.8 to 6.1 per cent in 2009-10, below the 6.7per cent recorded in fiscal 2008-09. While there has been an improvement in Indianindustry, particularly the manufacturing sector, the adverse impact of the fall in kharifproduction due to a rainfall deficiency will act as a drag on the overall growth of theeconomy. In the current financial year, the major policy challenges for thegovernment will come from the rather sharp rise in inflation and deteriorating publicfinances. The balance of payments situation may also require policy attention despitea narrowing of the current account deficit and a considerable capital account surplusbecause of the appreciation of the rupee.
