18 Mar 2010 2:23 PM

Growth momentum to continue

India's growth story continues to remain on track.

We expect industrial production to rise by 9.6 per cent in 2009-10 and by 9.4 per cent in 2010-11. The output of the manufacturing sector, which accounts for 79.4 per cent of total production, is projected to grow by a smart 9.6 per cent in 2010-11.

Industrial output, measured by the Index of Industrial Production (IIP), rose by 8.7 per cent in the first three quarters of fiscal 2009-10. The growth momentum in the demand for goods and services will continue in 2010-11. Consumption demand (in real terms) is expected to rise by 8.6 per cent, in tandem with the rising purchasing power of the urban, semi-urban and rural consumer. Industry is unlikely to face any problems in meeting this demand, as investments valued at Rs 6.5 lakh crore are scheduled to be commissioned in the fiscal.

The country's Real GDP growth declined marginally to six per cent in the December 2009 quarter. It was at 6.1 per cent in the June 2009 quarter and 7.9 per cent in the September 2009 quarter. We expect things to improve in the last quarter of the fiscal. GDP will grow by 7.1 per cent in fiscal 2009-10, and the growth is projected to accelerate to 9.2 per cent in 2010-11. Both industry and agriculture are expected to contribute in good measure to this growth.

In 2009-10, rabi foodgrain production is estimated to touch an all-time high of 117.5 million tonnes, in spite of a marginal decline in acreage. Favourable climatic conditions will contribute significantly to this growth.

Prospects for agricultural crop production appear bright in 2010-11. We project that production of major crops will surge by 10.8 per cent in fiscal 2010-11, as acreage and yield are both expected to rise. Foodgrain output is expected to grow by 9.5 per cent, and non-foodgrain output by 12.4 per cent.

Krishna Warrier
kwarrier@cmie.com