Hopes of breaching the double-digit growth barrier sprung anew on Tuesday.
The government’s mid-term economic review report predicted that the country’s gross domestic product (GDP) is likely to grow by over 9% in 2010-11, buoyed by a strong rebound in the farm sector and a robust services sector growth.
“All indicators therefore portend well for output growth crossing 9% for the entire fiscal year 2010-11, although some risks remain in the global economy which widens the band of expected growth outcomes (plus or minus 0.35% around a revised projection of 8.75%,” the finance ministry’s analysis, tabled in Parliament on Tuesday, said.
The analysis mirrored a strong domestic demand-driven growth revival, despite the developed economies’ woes.
India’s GDP has grown by 8.9% during the first six months of 2010-11, making it the second-fastest growing economy behind China’s expected 9% growth for the full fiscal year.
Despite a sluggish industrial output growth in August and September, there are signs of rising domestic demand in India.
Consumer durables sales have grown at robust pace mirroring growing demand for goods such as televisions, refrigerators and cars.
“This growth is also broadly based, with recovery in all three sectors, agriculture, industry and services, and in private consumption and investment. Abundant late rainfall is boosting agriculture,” analysis said.
“Sustaining such high levels of growth for a number of years, however, will require significant deepening of reforms initiative,” the report said.
Finance Minister Pranab Mukherjee said sustaining the high growth rates would also depend on the pace of recovery in major European economies.
“A sizable percentage of Indian exports are destined for Europe,” he said. “Therefore, the recovery — rather rapid and robust recovery — of Europe is important for India.”