New Delhi: The Planning Commission on Tuesday said that the 8.8% growth during the quarter to June is on expected lines and the economy will grow by more than the projected 8.5% for this fiscal.
“It (GDP growth) is on expected lines. The overall GDP growth in this fiscal would be slightly better than 8.5% as projected earlier,” Planning Commission deputy chairman Montek Singh Ahluwalia told reporters at Delhi.
He said that though the growth rate of the manufacturing sector is likely to be low during the rest of the year, the agriculture sector will register good performance.
The government is targeting an 8.5% growth in GDP for the fiscal 2010-11.
“IIP (Index of Industrial Production) growth for the rest of the year will be slow slightly on base effect, though it will remain in double digits overall,” Ahluwalia said.
IIP had grown by 7.1% in June, after being in double digits for previous months.
Ahluwalia, however, said that the farm sector will have positive results during the next few months.
“The base effect would have opposite effect on agriculture unlike the case with industrial growth,” he said.
As per data released on Tuesday, the economy grew by an impressive 8.8% during the quarter ended June on the back of robust manufacturing growth, as against 6% in the corresponding quarter of last fiscal.
Agriculture and allied activities grew by 2.8%, higher than 1.9% in the year-ago period.
Manufacturing expanded by strong 12.4% in April-June, 2010 against a mere 3.8% growth rate in the same period last year.
Ahluwalia said that wholesale price inflation will fall to around 6% by December.
The inflation had slid back to single digit at 9.97% after five months in July. Food inflation, however, has been above 10% since the last week of July.
When asked if inflation woes would be over soon, Ahluwalia said: “Absolutely.”.
He, however, said that the current situation is unlikely to lead to the Reserve Bank loosening the monetary policy.
“It is certainly true that with the growth being high there is no particular need for loosening monetary policy from the growth point of view,” Ahluwalia said.