Economy to grow at 8.6 %: CSO

Pumped by a strong agriculture growth and allied activities, the Central Government on February 07, declared that the economy would grow at an estimated 8.6 per cent during the current financial year as against 8 per cent a year ago.

The gross domestic product (GDP) estimates released by the Central Statistical Organisation (CSO) are higher than the predictions made by the Reserve Bank of India (RBI) and the Finance Ministry but are also an indication of the fact that the economy had slowed down somewhat in the second-half of the current financial year.

The Advance Estimates released by CSO on Monday revealed that agriculture and allied activities are likely to grow at 5.4 per cent in 2010-11 as compared to just 0.4 per cent in 2009-10 making a huge stride.

Earlier, Finance Minister Pranab Mukherjee had exuded confidence that the economy would grow by 8.5 per cent despite rising inflation. The RBI had also projected that the economy would expand by 8.5 per cent in its quarterly monetary policy review last month.

The latest GDP growth estimate of 8.6 per cent for the entire fiscal implies that the pace of economic expansion slowed in the second-half of 2010-11, given that GDP growth in the April-September 2010, period stood at 8.9 per cent. According to data released, agriculture and allied activities are projected to grow by 5.4 per cent this fiscal, as against 0.4 per cent a year ago.

The official figures said growth this fiscal is likely to be driven by an 8.8 per cent expansion in the manufacturing sector, the same as in the year-ago period. According to the advance estimates, mining and quarrying is likely to grow by 6.2 per cent as compared to 6.9 per cent a year ago, while electricity, gas and water production will grow by 5.1 per cent as against 6.4 per cent.

“The growth rate of 8.6 per cent during 2010-11 has been due to the growth rate of over 8 per cent in sectors of manufacturing, construction, trade, hotels, transport and communication, financing, insurance, real estate and business services,” an official statement said here.

During the current fiscal, the trade, hotel, transport and communication sectors are projected to grow by 11 per cent as against 9.7 per cent last fiscal and construction by 8 per cent as compared to 7 per cent in 2009-10. Furthermore, the finance, insurance, real estate and business services sectors are likely to grow by 10.6 per cent this fiscal as against 9.2 per cent last fiscal.

However, community social and personal services are likely to witness a slowdown in growth and register just 5.7 per cent expansion as compared to 11.8 per cent in the year-ago period.

The global financial crisis pulled down the growth of the Indian economy to 6.8 per cent in the 2008-09 fiscal from over 9 per cent in the preceding three years. The advance GDP estimates are released before the end of a financial year to enable the government to formulate various estimates for inclusion in the Budget.

Per capita income

The CSO said India's per capita income was projected to grow by 17.3 per cent to Rs.54,527 in 2010-11 from Rs.46,492 in the year-ago period.

Per capita income is calculated by evenly dividing the national income among the country's population. However, the increase in per capita income would be only 6.7 per cent in 2010-11 if it is calculated on the basis of 2004-05 prices.

Per capita income (at 2004-05 prices) stood at Rs.36,003 in 2010-11 against Rs.33,731 in the previous fiscal, according to the latest data on national income. The size of the economy at current prices is projected to rise to Rs.72,56,571 crore at the end of the current fiscal, up 18.3 per cent from Rs.61,33,230 crore in 2009-10. Based on 2004-05 prices, the Indian economy is projected to expand by 8.6 per cent in the current fiscal ending March 2011. This is higher than 8 per cent growth recorded in fiscal 2009-10. The country's population is expected to increase to 118.6 crore at the end of March 2011, from 117 crore in fiscal 2009-10.