Mumbai: India will have to live with high inflation and slow growth for the rest of fiscal 2009 while improvements in the supply scenario could improve long-term prospects and ease inflationary pressures, the National Council of Applied Economic Research (NCAER) said in its macrotrack monthly report.

"The inflationary pressure is more intense on primary articles and indicates the potential for easing of the pressure as the supply scenario improves," NCAER said, adding that the longer-term prospects will depend on how the country's policy makers address the twin concerns of demand pressure and high rate of inflation. 

India's inflation touched a 13-year high of 11.42 per cent this week, drawing instant monetary, fiscal actions from its policy makers. 

The government imposed trade restrictions to tame the inflationary pressures and the central bank announced a series of hikes in its key-rates. 

The slow-down in growth on account of the adverse global factors may be offset by the expansionary fiscal policy, the report said, however, adding," the latest turbulance in the crude oil market is an important factor that needs to be watched as the year progresses".
 
While high food prices may help raise foodgrain output, raising non-foodgrain crop output may turn out to be a challenging affair, NCAER said. The country's non-foodgrain produce includes oilseeds, sugarcane, fibres like cotton, jute, spices, fruits and vegetables, plantation crops and other miscellaneous crops like tobacco and guar seed.

Fruits and vegetables, oilseeds, spices, sugarcane and fibres account for an overwhelming share of the total output. A lot will depend on technology and productivity growth and the availability of area. The growth in non-foodgrain production at 1.9 per cent has outpaced the output growth of foodgrains at 1.1 per cent since 1990, the study noted.