Indian economy would grow by 8.6 percent in this financial year, despite fragile global recovery since financial meltdown of 2008."All along I was maintaining, it should be around 8.5 per cent plus. 8.6 per cent is accepted," Finance Minister Pranab Mukherjee said adding, "Now the other issue is inflation, trade balance... these are to be addressed".Agriculture and allied activities are expected to grow at 5.4 percent in 2010-11 compared to just 0.4 percent in the previous financial year.
The 8.6 percent GDP growth prospects however could not cheer markets. The BSE benchmark sensex closed almost flat at 18037.19 on concerns of inflation and rising interest rates.The CSO's GDP growth projection is a shade higher than the forecasts of 8.5 percent made by the Reserve Bank of India and the Finance Minister Pranab Mukherjee earlier.While services such as trade, hotel, transport and communications improved to 11 percent from 9.7 percent, the manufacturing remains static at 8.8 percent year on year.
Mining and quarrying is likely to grow by 6.2 percent, compared to 6.9 percent a year ago, while electricity, gas and water production will grow up by 5.1 percent, as against 6.4 percent in the previous fiscal.With over dependence on monsoon, the country's agricultural growth continues to fluctuate year-on-year depending on the weather gods.Mukherjee said the economic growth estimated was satisfactory in the wake of the rising inflation and trade imbalances.The overall inflation has remained above the comfort zone of 5-6 percent for over a year now.
In December, inflation shot up to 8.43 percent, from 7.48 percent in the previous month. Food inflation for the week ended 22nd January stood at 17.05 percent.
However, Chief Economic Adviser Kaushik Basu while admitting inflation was a concern, said it would not affect the growth story."And the target of 9 per cent economic expansion for the next financial year is well with in the reach," he added.
"The prospects for the world as a whole are looking better but still there are uncertain clouds. In that scenario growth of 8.6 per cent is absolutely remarkable. So the 9 percent which we are aiming for next year is now looking well within target," Basu said.Earlier, the GDP estimate for 2009-10 was revised upward to 8 percent from 7.4 percent.
Chief Statistician T C A Anant said had the GDP estimates been calculated on the 7.4 percent (before it was revised to 8 per cent resulting in higher base) "you would find out that the growth rate would have been over 9 percent for 2010-11.""There is a likely possibility that there would be further downward revision of the overall GDP for 2010-11," Samiran Chakrabarty, chief economist, Standard Chartered said.
Commenting on the growth estimates, Ficci secretary general Amit Mitra the numbers are "quite encouraging"."The concern is that manufacturing growth projections are same as the growth rate of last year, though there has been some improvement in services," he added. The estimates for manufacturing sector expansion at 8.8 percent this fiscal is same as that it was in 2009-10.
Abheek Barua, Chief Economist with HDFC Bank said the GDP estimates show there is a deceleration in the industry in the second half of the fiscal."This (deceleration) could intensify in the next fiscal year," he said.
The CSO data further said the net national income (NNI) at factor cost (2004-05) is likely to be Rs 42,69,994 crore during the current fiscal, as against the previous year's quick estimate of Rs 39,46,540 crore.In terms of growth rates, the national income is expected to rise by 8.2 percent during 2010-11 in comparison to the growth rate of 7.5 percent in the year ago period.The per capita income in real terms (at 2004-05 prices) during 2010-11 is likely to attain a level of Rs 36,003 as compared to the quick estimates for the previous year of Rs 33,731.The global financial crisis pulled down the growth of the Indian economy to 6.8 percent in the 2008-09 fiscal from over 9 percent in the preceding three years.
The advance GDP estimates are released before the end of a financial year to enable the government to formulate various estimates for inclusion in the Budget.
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