Indian economy to grow between 6.1 and 6.5pc

NEW DELHI: The Indian economy is expected to grow by 6.1 to 6.5 per cent during 2009-10 owing to high growth in key sectors like agriculture and services, according to a study conducted by an industry lobby.

“We are factoring in GDP (gross domestic product) growth of 6.1 to 6.5 per cent in 2009-10, based on sectoral growth rates of 2.8 to 3 per cent, 5 to 5.5 per cent and 7.5 to 8 per cent, respectively for agriculture, industry and services,” the report by the Confederation of Indian Industry (CII) said.

According to the advanced estimate figures of the Central Statistical Organisation, the economy grew by 7.1 per cent in 2008-09 after the expansion rate dipped to 5.3 per cent in the third quarter of the current fiscal year.

The CII also said that several factors like decline in interest rates, moderation in prices of food and fuel and reduction in excise duty and service tax had helped the economy improve.

On the economic performance front during the last fiscal year, the report said that food grain production stood at 227.9 million tonnes, short of the targeted 233 million tonnes while the industrial growth decelerated to 2.8 per cent during April-February 2008-09 from 8.8 per cent in the like period the year before.

“The drivers of the economic growth have to come from domestic sources. The government, therefore, needs to maintain higher spending, especially in the creation of public assets. Besides, the Monetary Policy, in turn, needs to be supportive,” the chamber said.

The report — which analysed the financial performance of 324 companies (173 in the manufacturing and 151 in the services sector) during the quarter that ended on March 31, 2009 — said there was a sharp fall in the sales of these companies.

The net sales growth of these companies dropped to 8.7 per cent in January-March this year from 23.7 percent in the like period last year.

India’s merchandise exports last fiscal grew by 3.4 per cent to $168.7 billion from $163.13 billion in 2007-08, but fell short of the target of $200 billion.

“As exports fell to a greater extent than imports, the trade deficit rose to $115 billion during April-February 2008-09 from $82.2 billion the previous year,” the report said.

The global financial turmoil has also resulted in a sharp decline in the capital inflows into India. During the April-December 2008 period, the balance of payments (BoP) ran a deficit of $20.4 billion.

The RBI’s foreign exchange reserves declined by $57.4 billion during 2008-09, it added.