CMIE projects India’s growth rate at 8.8%

The Indian economy is set for a robust performance in the 2011-12 financial year with real GDP growth of 8.8 per cent, the Centre for Monitoring Indian Economy (CMIE) said in a report released today.

The Indian economy is expected to close the current financial year with an average 9.2 per cent growth, CMIE said in its projection.

"We project that real GDP will grow by 8.8 per cent during the fiscal, " CMIE said in its report.

The agriculture sector is projected to grow 3.8 per cent, the industrial sector by 9.4 per cent and the services sector by 9.9 per cent, according to CMIE.

Foodgrain production in the country is expected to grow 3.7 per cent and touch a record 236.9 million tonnes, assuming that the monsoon does not play spoilsport.

Foodgrain production will be boosted by higher output of rice and wheat, which in turn will raise the levels of disposable incomes, CMIE said.

The report projects growth in industrial production to be driven by a rise in consumption demand and investment demand.

Consumption demand, in turn, will be driven by a rise in corporate wages, fresh employment generation and lower inflation.

Corporate India is also expected to spend 14.7 per cent more on salaries and wages in 2011-12, leaving more money in the hands of urban consumers as well.

According to CMIE, projects cumulatively valued at Rs8,00,000 crore are scheduled to be commissioned in 2011-12, against projects worth Rs3,600,000 crore in the current fiscal.

The largest contribution to these capacity additions will come from the electricity sector, it said.

"We estimate that real GDP has grown by 9.2 per cent in fiscal 2010-11, though the Central Statistical Organisation (CSO) has pegged the growth rate at 8.6 per cent," CMIE said, adding, "CSO's estimate is lower because it had revised its GDP growth estimate for 2009-10 upward from 7.4 per cent to 8 per cent on 31 January. Over the un-revised number, its growth estimate for 2010-11 would have worked out to 9.3 per cent."

The agriculture sector is estimated to have grown 5.1 per cent in 2010-11, the industrial sector by 9.5 per cent and the service sector by 10.2 per cent.

Consumer spending is back on track as purchasing power has increased. Private final consumption expenditure (PFCE) is estimated to have grown by 8.6 per cent in 2010-11, compared to 4.3 per cent in the preceding fiscal.

Exports account for about 15 per cent of the country's GDP, according to CMIE.