New Delhi, July 23 (IANS) Following are the highlights of the observations and forecasts on the performance of the Indian economy made by the Prime Minister's Economic Advisory Council, chaired by C. Rangarajan, here Friday:

-Economy to grow at 8.5 percent in 2010-11 and 9.0 percent next fiscal

-Agriculture to grow at 4.5 percent in 2010-11 and 4 percent next fiscal

-Industry to grow at 9.7 percent in 2010-11 and 10.3 next fiscal

-Services to grow at 8.9 percent in 2010-11 and 9.8 percent next fiscal

-Rising domestic savings and investment chief engines of growth

-Investment rate expected at 37 percent in 2010-11 and 38.4 next fiscal

-Domestic savings expected at 34 percent in 2010-11 and 36 percent next fiscal

-Capital inflows projected at $73 billion for 2010-11 and $91 next fiscal

-Inflation rate projected at 6.5 percent by March 2011

-Controlling high inflation rate essential for sustainable growth in medium term

-Bias toward tightening monetary policy is necessary

-Exchange rate variations will remain within acceptable range

-Exit from expansionary fiscal policy feasible and necessary

-High buoyancy in direct and indirect tax collections

-Spectrum auction and fuel prices decontrol to provide cushion

-Fiscal deficit may be lower than budgeted 8.4 percent of GDP

-Introduction of goods and services tax should be a priority

-Need to rationalize the food and fertilizer subsidies

-To sustain a growth rate improving farm productivity necessary

-Also important to close large infrastructure deficit, especially in power