CMIE pegs FY10 growth at 7.1%; 9.2% in FY11

CMIE pegs FY10 growth at 7.1%; 9.2% in FY11

Mumbai: Driven by an estimated 8.4% growth in the fourth quarter, the economy is expected to grow by 7.1% in the just-concluded fiscal and by a robust 9.2% in the current financial year, the leading economic think-tank CMIE has said.

“We estimate the real gross domestic product (GDP) would have risen by 7.1% in fiscal 2009-10...and by 9.2% in 2010-11," the Centre for Monitoring Indian Economy (CMIE) said in its report here on Thursday.

While GDP growth for the just-concluded fiscal is a tad lower than the 7.2-percentage point expansion that finance minister Pranab Mukherjee as well as the Central Statistical Organisation have been projecting, the current year projection is much above the minster’s 8.75% spike.

In the fourth-quarter, it is estimated to have grown by an “impressive" 8.4%, the CMIE report said, adding during the first three-quarters of the past fiscal, real GDP grew by 6.7% compared to 7.1% in the same period of 2008-09.

“The growth in 2009-10 would be driven by the rise in GDP from the industrial sector including construction, it said," adding, “we estimate that the industry sector would have grown by 9.4% in 2009-10, with the manufacturing segment clocking a robust 10.3% growth."

Real GDP from mining and quarrying is estimated to have grown by 10.3% in 2009-10, on top of a 9.7% growth in 2008-09.

“Coal, natural gas and iron ore are the few items whose production has recorded impressive growth," the CMIE said. Growth in the services sector is estimated to have come down to 8.2% in FY10 from 9.8% in FY09, it said.

This slowdown is largely on account of a steep deceleration in growth in the public administration and defence segment to 8% from 22.1% in 2008-09,“ the CMIE said.

Real GDP from the agricultural and allied sector is also estimated to have declined by 1% in FY 10 because of a decline in kharif crop production, it said.

This would be the first fall after 2002-03, when the sector had witnessed a 7.2% decline, it said.

For FY 11, the CMIE report said that it expected that all the three broad sectors of the economy — agriculture and allied sector, manufacturing sector and services sector — to improve their performance.

The industrial sector, including construction, is projected to grow by 9.6% in FY11, better than the 9.4% in FY10, the report said.

Growth in the construction sector will be led by food products segment, particularly sugar and edible oil, the CMIE report said.

“Acceleration in consumption and investment growth in 2010-11 will contribute to a higher growth in consumer durables and capital goods output," it said.

Around Rs6.5 lakh-crore worth projects are scheduled to be commissioned during FY11 as against an estimated Rs4 lakh-crore in FY10, it said.