Current growth rates are sustainable and inflation can be managed, the Economic Survey says. But, better government intervention and delivery of subsidies are required for inclusive growth.

The finance ministry has borrowed a widely used term by Indian economic commentators and has categorically stated that our economy has "decidedly taken off".

The survey supports the view that the economy has made a structural shift ''from a phase of moderate growth to a new phase of high growth''. But the government is concerned about managing this growth and lists out two issues and three priorities.

The first issue is the sustainability of growth with moderate inflation. The survey says current growth rates are sustainable because of the following factors and developments.

• There would be no lack of funds for investments as higher growth and the demographic dividend would ensure that savings rate would rise, leading to a virtuous and mutually reinforcing cycle of growth-savings-growth.
• Efficiency gains are likely to be sustained in the coming years.
• New segments in the services sector like tourism offer tremendous potential for future growth
• Additional investments can help overcome capacity constraints
• Infrastructure is showing improvement with tangible progress in power, roads, ports and airports. Investments in the sector would rise further in future and the $5-billion infrastructure fund recently launched by overseas investors is encouraging.

The second issue is the inclusiveness of growth and the survey says it would depend on the success in achieving and maintaining high growth. It warns that there cannot be inclusive growth without growth itself and argues that the low job growth in recent years was because economic growth was not high enough. The survey also seeks to dispel the misconception that inclusive growth has to be necessarily low growth.

The survey argues that there is no scope for uneasiness or nervousness about high growth, citing the successful East Asian and Chinese examples. The government is confident that inflationary pressures can be managed through calibrated policies without compromising growth. The survey says most of the recent rise in price levels is because of supply side pressures because of poor and inefficient intermediation between the producer and the consumer.

The survey admits that there are no immediate answers to the inflation problem. Among the possible solutions would be to increase the yields and hence the domestic output of pulses and cereals.

Fiscal prudence and high investments are the twin pillars of high growth, the survey says. Economic growth in recent years is not an accident, but a result of sound policies and reforms. While higher investments are still required in the economy, it should not be at the cost of fiscal profligacy. The survey says the country''s investment grade credit rating reflects its improving fiscal situation

Improving the effectiveness of government intervention in social sectors is the third priority. The survey says government intervention in areas like healthcare and education is critical for achieving inclusive growth. With the launch of the job guarantee scheme, the utility of other poverty alleviation programmes need to be examined.

The survey defends subsidies saying they are necessary for correcting market failures, especially to rectify under-consumption of food. But the survey also talks about the need for better and more efficient delivery channels for subsidies.

Though downside risks like an unravelling of global economic imbalances, volatile oil prices and delays in world trade talks remain, they appear to be limited. The review of current economic environment in the survey concludes by stating that the current economic situation is characterised by a sense of optimism.