Brace up for a bout of sustained inflation, that''s what the Economic Survey suggests. It says that the pressure of prices will persist during the year because of short supply of essentials, and firm international prices.

On the other hand, demand is being fed by high growth, the surge in reserve money because of foreign inflows, the rise in money supply and the huge increase in credit. The impact of duty cuts and the Reserve bank''s policies will be felt in the days to come. But unless supply of essentials is increased, inflation will not be fully tamed.

The survey calls for increase in domestic production of staples like rice, wheat, cooking oils and pulses through better technology. It says, in the short run, there will be a gap between the remunerative price paid to farmers and fair price to consumers but these should not translate into increased food subsidy.

o Expects pressure on prices during this year o Says short supply of staples, high global prices the reason o Demand fed by high growth, foreign inflows, money supply, credit o Impact of duty cuts, dear-money policies to be felt shortly But inflation will remain unless supply of staples improves.

Speaking about the survey, the finance minister P Chidambaram said that one of the key challenge for the government is to tame inflation without hurting growth.

He says that the government will continue to take steps to combat rising prices. Chidambaram feels that they may reach desired gross domestic investment target by the start of the 11th plan. He informs that issues that need to be addressed have been identified.

"Despite concern about the rising prices, we share the concern and we have taken a number of steps to moderate prices and we will continue to take steps. The most heartwarming aspect of the economy is that both gross domestic savings and gross domestic investments have moved up very sharply. In fact, it appears that we may have reached the desired gross domestic investment target even at the beginning of the 11th plan period," says Chidambaram. According to the finance minister, sustaining high growth without high inflation is a key challenge. He is looking at a multi-pronged, multi-sectoral approach to development.

In his view, managing growth remains a priority. Also, fiscal prudence, government intervention in sectors and high investment are other priorities. The finance minister aims to look forward to another year of high growth. "We have identified issues, which need to be addressed. The most important issue is the human and general development indices; for India it''s still low, in fact between 2003 and 2004, India''s relative rank moved up only by one place.

These issues can be addressed only by a multi-pronged, multi-sectoral approach to development. We have identified two main issues and we have also identified three priorities."