Economy to grow over 8.5% in FY’11: Mukherjee

Economy to grow over 8.5% in FY’11: Mukherjee

New Delhi: Buoyed by the encouraging first quarter GDP numbers, finance minister Pranab Mukherjee on Tuesday expressed confidence that the economy will grow by not less than 8.5-8.75% this fiscal.

“The numbers are quite encouraging ... more encouraging point is 12.4% growth which has been registered in the manufacturing sector. I think the highest growth rate in the last 11 quarters ... I do hope it will be possible to maintain this level of growth," Mukherjee told reporters.

According to the official data released on Tuesday, the economy grew by 8.8% during the quarter to June.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6% growth rate in April-June 2009-10.

The show-stopper for the quarter is the manufacturing sector, which expanded by a strong 12.4% in April-June, 2010, against a mere 3.8% growth rate in the same period last year.

The minister, however, said that more is required in the agriculture sector to ensure sustainable growth.

“I am happy that manufacturing sector has registered satisfactory growth level which means that there has been more employment generation and job creation ..."

“We shall have to reach the 4% growth in agriculture to have sustainable growth ... Keeping that in view, I am quite confident that whatever was projected in the Economic Survey while projecting the Budget for the year that GDP growth will not be less than 8.5% to 8.75%," Mukherjee said.

Agriculture and allied activities grew by 2.8%, higher than 1.9% in the year-ago period, but it is no where between the target of 4% pegged by the government in the medium term.

Construction grew by 7.5% compared to 4.6%. Among services, financial, insurance and real estate services expanded by just 8%, against a growth rate of 11.8% in the year-ago quarter, while community social and personal services growth slowed down to 6.7%, against 7.6% a year ago.

However, trade, hotels and communication services rose by 12.2%, against 5.5% during April-June 2009.