Presenting the report card of the first year of the UPA governments 2nd term, the Prime Minister Dr. Manmohan Singh and the UPA Chairperson Mrs. Sonia Gandhi informed the country that the final figures put out by the Central Statistical Organization, CSO, have recorded a 7.4 % growth for the economy in the year 2009-10, even higher than the earlier estimates of 7.2%. This has reinforced the view that the growth rate for the current year will be around 8.5 %, with a clear possibility of achieving double digit growth in the following year, which the Prime Minister said, is needed to pull the people out of poverty and malnutrition.

In fact, the country has witnessed a gradual revival for the last six months. The last quarter has been particularly good with manufacturing sector recording a 16.3 % growth compared to just 0.6 % in the same period last year. Exports, which have been increasing consistently for the last 6 months registered a fabulous growth of 36% in April. All this has been happening after exports kept on falling consistently for 13 months, making things difficult for the entire economy. Imports too increased by 43% in April, which left a trade deficit of over $10 billion, the difference between the import bill of $ 27.3 billion and the export earnings of $16.9 billion. In 2009-10 Indian exports actually fell by 4.7 percent. We are now targeting an export growth of 15 % for the current year.

The biggest surprise was in the agricultural sector where we have been expecting a negative growth of .02 % but actually got a positive growth of .02%.

It is in this backdrop that the report card spoke of India recording “one of the best performances in the world” in the year under review, particularly in view of the exceptionally difficult and challenging time we were faced with. But the Prime Minister explained that he held this optimism with caution in view of the “tremendous challenges that lie ahead” and the “uncertainties that lie on the horizon”.

Inflation, price rise and fiscal deficit continue to be worrisome. Though inflation came down marginally in May to 9.6% against 10.1 percent in February, it is a cause of concern. Thankfully, the government is confident that it can bring it down to 5.5 percent by the year end. The report card therefore spoke of the need to return to the path of “fiscal prudence” in a calibrated manner. This will also reduce the high fiscal deficit we have been facing due to pumping in of massive liquidity into the economy through fiscal and monetary stimuli measures. When and how that happens is for the RBI to decide.

The Euro zone debt factor may not affect India much but if the crisis deepens it will lead to a fall in demand from the Euro zone putting renewed pressure on our exports. The RBI governor believes that our comfortable Foreign Exchange reserves will be able to deal with the situation should there be any extraordinary pressures from the Greek crisis.

On the price front the Prime Minister expressed happiness that prices have shown a moderation in the recent weeks and hoped that this trend would continue. But he was quick to add that this needs close and careful monitoring, which would be done and “corrective steps taken wherever necessary” to rein in inflation. Inflation and high prices remain a threat to the growth of the economy.

But growth by itself may not mean much even for a trillion dollar economy like India, if it is not inclusive. That is why the report card puts special emphasis on the progress of underprivileged classes of the society and the minorities. It reiterates the Government's commitment to continue to work for the welfare of this class of our society. Empowerment of women and education are the focus of the Government to achieve this end.

The report card says that the Government's flagship programmes like the Bharat Nirman, NREGA, and the National Rural Health Mission are “progressing well and making an impact on the ground”.That being the case, “cautious optimism” perhaps is the right expression to describe the situation.