Economy

Farm sector may slow down GDP growth to 8.8% next fiscal: CMIE

PTI Mumbai | Updated on February 17, 2011 Published on February 17, 2011

A farm worker applying fertiliser at a paddy field . According to CMIE, growth in the agriculture and allied sectors is projected to decelerate to 3.1 per cent in 2011-12 from the 5.1 per cent growth estimated in 2010-11.(file photo)   -  Business Line

India's GDP growth is expected to slow down to 8.8 per cent during next fiscal (FY'12) from 9.2 per cent projected for this fiscal (FY'11), a leading economic think-tank has said.

Growth in FY'11 has been powered by a rebound in the agriculture sector and a sharp pick-up in private consumption and this growth momentum is expected to continue during next fiscal as well, it said.

For FY'12, when the growth is expected to slow down, "the downside risks relate mainly to poor rainfall and to the performance of the global economy,'' the Centre for Monitoring Indian Economy (CMIE) said in its latest review of the country's economy.

Growth in the agriculture and allied sectors, industrial sector and the services sector and its segments is expected to decelerate. However, the construction sector is expected to fare better in FY'12 than in FY'11.

"Growth in the agriculture and allied sectors is projected to decelerate to 3.1 per cent in 2011-12 from the 5.1 per cent growth estimated in 2010-11. This deceleration explains the marginal drop in real GDP growth in 2011-12,'' the CMIE said.

The industrial sector, including construction, is projected to grow at a slower pace of 9.4 per cent in FY'12 compared with the 9.5 per cent estimate for FY'11.

"Steel, cement, automobiles and petroleum products segments are projected to see a 9 per cent-plus growth in 2011-12. Other industries like paints and varnishes, tubes and pipes, sponge iron, lifts and elevators, domestic refrigerators and transformers are expected to do well too,'' the CMIE said.

Industrial production growth will be driven by a rise in consumption and investment demand, it said.

Consumption demand will be driven by a rise in corporate wages, fresh employment generation and lower inflation, while investment demand is expected to be buoyant as more and more projects move into the implementation stage, it said.

Projects worth Rs 8 lakh crore are scheduled to be commissioned during fiscal 2011-12 compared with Rs 3.5 lakh crore during fiscal 2010-11.

"This is expected to push up activities in the construction sector. The sector is projected to grow by 10.5 per cent during the fiscal compared to an estimated 9.5 per cent in 2010-11,'' the CMIE said.

Growth in the services sector and its segments is projected to moderate in FY'12. The services sector is projected to expand by 9.9 per cent in FY'12, lower than the 10.2 per cent estimate for the 2010-11 financial year, the think-tank said.

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Published on February 17, 2011
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