India's per capita income is expected to increase by 7 percent in the fiscal year ending in March, the first time in the past 15 years, according to the Economic Advisory Council (EAC) to Indian Prime Minister.

The overall economic growth will reach 9 percent this fiscal year with a sharp increase of the saving rate, which will be 35 percent of gross domestic product (GDP), said Dr. C. Rangarajan, chairman of the EAC, at a meeting chaired by Prime Minster Manmohan Singh Saturday.

But inflation will be a key macro-economic challenge in the short-term despite robust performance of the economy, he said.

The supply constraints in domestic market mainly contributed to the inflation, he said, suggesting that appropriate interventions in the real economy, lower tariffs, higher agricultural and industrial productivity will help ease the supply constraints and the price pressure.

Singh said at the meeting that reducing the inflation rate will be a priority to the government.

Source: Xinhua