GDP to grow at 7% this Fiscal

By agencies   |   Monday, 10 October 2005, 19:30 IST
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NEW DELHI: Indian economy, which grew by 8.1 percent in the first quarter, will clock a growth rate of 7 percent for entire 2005-06 against 6.9 percent last fiscal, economic think tank Institute of Economic Growth (IEG) forecasts in its latest report. Meanwhile, inflationary expectations still persist in the economy given the growing money supply and high world oil prices, IEG said in its latest Monthly Monitor. Although both industry and services sectors are expected to be growing below compared to 2004-05, it is still above the average growth, IEG said. Agriculture, which has shown a growth of 2 percent in the first quarter of this fiscal and whose share in the total GDP fell below 20 percent for the first time, is expected to do better this year, particularly in the rabi season compared to last year, it said. The institute predicted that wholesale prices-based inflation rate, which was 3.75 percent in the middle of September, would stand at 4.15 percent, 4.4 percent and 4.8 percent for October, November and December, respectively. Industry, which grew about 9.6 percent in Q1, will not be able to sustain the growth and end up growing at 7.2 percent during the current fiscal, the economic think tank said. The growth of index of industrial production (IIP) fell to 6.7 percent in July 2005 compared to 11.7 percent in the previous month, it said. Negative growth in both mining and electricity sectors by 0.4 and 1.2 percent respectively has led to this fall in overall IIP growth, the journal said. This fall in IIP growth could be an aberration as this was the consequence of devastating rainfall in the West of India, IEG said. But the overall growth in industrial sector for 2005-06 is dependent on the external demand, it added. Economy grew by 6.9 percent last fiscal with agriculture posting a 1.1 percent growth, and industry and services registering a 7.6 percent and 8.9 percent growth, respectively. The economic think tank predicted the CPI inflation rate to hover around 3.6 percent in September, October and November.