The Finance Minister, Mr. Pranab Mukherjee has informed that the economy is expected to rise by 7.5 to 8 percent during the current financial year, while he expressed concern on the rising food prices in the country.

The Finance Minister presented a review in the parliament in the last week, which stated that economic growth rate during this year is expected to go beyond the 7.75 percent mark as compared to the 6.7 percent registered in the 2008-09 period.

Before the global recession started, Indian economy was growing at 9 percent, which decreased to 6.7 percent during 2008-09.

Pointing at the short term and medium term challenges for the economy, Mr. Mukherjee said that government has to deal with the price rise and increasing fiscal deficit in order to meet the dreamed growth of 9 -10 percent.

According to the recent data, food inflation up surged by 20 percent which is highest in the last ten years, while the fiscal deficit jumped to 6.8 per cent in the current fiscal, which is more as compared to what was prescribed in the Fiscal Responsibility and Budget Management (FRBM) Act.

Due to the drought resulting from the insufficient rain and the floods in the southern parts of the country, agriculture and related sector growth rate, decelerated to 0.9 percent from 2.7 percent in the corresponding period of the last year.

Speaking about the Direct Tax Code, Mr. Mukherjee informed that the Finance Ministry would consider inputs from various agencies, including industry chambers for the nine areas of the concerns, before finalizing the code which will replace the Income Tax Act, 1961.

The government has proposed to introduce the Goods and Services Tax from April 1, 2010. The GST will subsume various indirect taxes like excise, service tax and other levies imposed by the states.