India economy to expand 8.6 percent this fiscal (Roundup)

NEW DELHI - The Indian economy is expected to grow 8.6 percent this fiscal against 8 percent in the previous year, led by 11 percent growth in services, 5.4 percent in agriculture and 8.8 percent in factory output, according to official data released Monday.

As per fresh estimates released by the Central Statistical Organisation (CSO), the gross domestic product (GDP) expanded by 8 percent last fiscal and 6.8 percent in 2008-09. The latest estimate for the current fiscal is also higher than 8.5 percent forecast by the central bank.

Strong agriculture performance aided by growth in manufacturing and services has helped in restoring high overall GDP growth, Finance Minister Pranab Mukherjee said reacting to the advance estimate of the economic growth data.

He said construction activity was also showing improved growth momentum.

The finance minister said 9.7 percent GDP growth at market price reflected buoyancy in tax collections.

Higher than anticipated nominal growth in GDP will also ensure that our performance on fiscal and revenue deficit targets for the year would be better than the projections in the Budget 2010-11, Mukherjee said in a statement. India’s GDP at current price is estimated to expand 18.2 percent during the current fiscal.

The country’s GDP at factor cost at constant 2004-05 prices is likely to reach Rs.4,879,232 crore (over $1,072 billion) in fiscal 2010-11 as against the quick estimate of Rs.4,493,743 crore during the previous fiscal.

Economic growth for the first half of this fiscal is likely to be revised downwards from 8.9 percent provisional estimate, T.C.A. Anant, chief statistician of India, told reporters here.

“Principally, 8.9 percent data was based on what we had projected last year. Now, the base for the previous year has slightly gone up. So the real growth during the first two quarters will be lower,” said Anant, adding that the growth during the first half of this fiscal was likely to be revised downward to 8.5-8.6 percent.

GDP growth for 2009-10 has been revised upwards from 7.4 percent to 8 percent, according to the quick estimates of national income released recently by the CSO.

A significant turnaround is seen in farm output this fiscal. The agriculture, forestry and fishing sector is likely to show a growth of 5.4 percent in 2010-11 as against 0.4 percent in the previous fiscal.

The services sector, that includes trade, hotels, transport and communication, is estimated to expand 11 percent this fiscal. Financing, insurance, real estate and business services are expected to show a growth of 10.6 percent on the back of 14 percent growth in aggregate deposits and 22.6 percent growth in bank credit during April-November 2010.

The manufacturing sector is estimated to grow 8.8 percent while mining and quarrying is expected to register a growth of 6.2 percent.

The per capita income in real terms is forecast to expand to Rs.36,003 (about $790) this fiscal, compared to the estimate of Rs.33,731 in the previous year. “The growth rate in per capita income is estimated at 6.7 percent during 2010-11, as against the previous year’s estimate of 6.1 percent,” the CSO said.