India to grow 9 percent in 2011-12: PM’s advisor

NEW DELHI - India’s economy is likely to grow by 9 percent in 2011-12 on the back of 10.3 percent growth in services and 9.2 percent expansion in industry sector, the chairman of the prime minister’s economic advisory council said Monday.

“We hope that the economic growth in the next fiscal year will be about 9 percent. Services as well as industry are expected to do better,” said C. Rangarajan, chairman of the economic advisory council to the prime minister, while releasing the Review of the Economy for 2010-11.

Rangarajan said the Indian economy was expected to expand 8.6 percent in the current fiscal, broadly in line with the council’s last year projection and budget estimates.

The central statistical organisation had also recently indicated in its advance growth estimates that the country’s gross domestic product could grow by 8.6 percent in 2010-11.

The services sector is expected to grow 10.3 percent in 2011-12 as against the estimated growth of 9.6 percent in the current fiscal and industry is likely to grow 9.2 percent next fiscal as against 8.1 percent projected growth next fiscal.

However, agricultural growth is likely to be slow next fiscal because of high base. Agriculture sector growth is estimated to fall to 3 percent next fiscal from the projected 5.4 percent growth in the current fiscal.

“Agriculture has done well this year. But you will also recognise the fact that the strong growth rate in agriculture of 5 percent plus comes on top of somewhat poor agricultural performance in the two previous years,” he said.

Rangarajan, however, said that a dip in manufacturing output in November and December indicated that growth in the sector could be flat in the last quarter of the current fiscal, resulting in a dampening effect on the economy.

The former Reserve Bank of India governor said industry as a whole could grow by 8.1 percent, and pegged manufacturing output at 8.8 percent for the current fiscal.

“The somewhat slower rate of growth in manufacturing in the last few months, for which data are available, would indicate that the industry growth rate may be lower but it can be compensated to some extent by the better performance of the mining sector and services sector,” he added.

Growth in the services sector could be much stronger and was likely to grow by 9.6 percent, helped by a good performance in the first half of 2010-11.

Exports in the year, according to the balance of payment data, could touch $230 billion and the imports could be of the order of $362 billion, he added.