RTTNews - The Centre for Monitoring Indian Economy (CMIE) forecasts that India's real Gross Domestic Product (GDP) will grow by 6.6% in 2009-10. The think tank expects real GDP growth at 6.5% for the year 2008-09.
CMIE stated that 2009-10 economic growth is likely to be lower than expected inspite of the agriculture sector doing well during the second half of 2008-09 and the industry recovering by January 2009. The tempered expectations is attributed to a deep declines in the growth rates of the trade and transport sectors. Overseas trade declined and trade in commodities like cotton and sugarcane also slowed down. The freight movement on the railways and cargo movements on ports witnessed steep fall.
CMIE said that it could not see any signs of recovery in agriculture and industry during the March quarter and hence anticipate a moderate growth of 6.5% in 2008-09. It also said that the growth of six core industries was 2.2% in February 2009, the highest in the last four months. It further added that industrial production continues to grow slowly and anticipates IIP growth of 2.7% for the year 2008-09. This might lead to an estimated growth of 4.3% in the industrial sector as a whole, compared to 8.1% growth reported the year ago.
However, with the recovery in cement, steel, automobile, it forecasts a better core industry index in the coming months. The problems of rising inventory and liquidity crisis that the industry faced during the December quarter have been addressed. The continued growth in cement despatches, the quick recovery in the automobile and steel sectors indicate that the Indian industry continues to face strong domestic demand. Low inflation and low interest rates are likely to further strengthen this demand impetus. Hence, CMIE anticipates that the industrial sector will show higher growth of 6.1% in 2009-10 compared to 4.3% in 2008-09.
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