GDP set to grow 8.6% in 2010-11 | business | Hindustan Times
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GDP set to grow 8.6% in 2010-11

business Updated: Feb 08, 2011 01:09 IST
HT Correspondent

The government on Monday tweaked up the economic growth rate for the current fiscal year, sending a mild note of cheer to an economy worried by prospects of a slowdown.

India's gross domestic product (GDP) would grow by 8.6% in 2010-11, marginally above its original 8.5% estimate, buoyed by a strong rebound in the farm sector, the government said. But rising prices and volatility in foreign institutional investment (FII) remain key worries.

India's economy had grown by 8.0 % in 2009-10. Overall, the data showed strong domestic demand driving growth in India, despite some industrial sluggishness, while developed economies are showing a bumpy recovery.

Finance minister Pranab Mukherjee said the buoyancy in tax collections was reflected in the GDP growth, which has been aided by strong spending in the private sector.http://www.hindustantimes.com/Images/HTEditImages/Images/08_02_11_buss25c.jpg

While private consumption is estimated to grow at 8.2 % in 2010-11 over the previous year, the growth in investment is anticipated at close to 9 %, advanced estimates of national accounts showed. Growth in government spending is estimated to moderate significantly to 2.6 % in 2010-11.

India's GDP grew 8.9% during the first six months of this fiscal year, making it the second fastest growing economy in the world, next only to China's estimated 9 % growth in 2010.

Consumer durables sales have grown at robust pace mirroring higher purchases of goods such as televisions, refrigerators and cars and a growing consumer appetite.

"The strong revival in private spending and improvement in investment growth is a welcome sign," Mukherjee said. "However, we still have some distance to go before regaining the investment growth witnessed in the pre-crisis period," he said.

Prices, however, remain a worry.