CII sees GDP at 8-8.5%, says inflation a worry

India's GDP is projected to grow at 8-8.5% in 2011-12 though inflation remains a concern, a leading industry body said.

"We estimate the GDP growth at 8.0-8.5% in 2011-12. Even with moderation in growth, India will remain one of the fastest growing countries in the world," Confederation of Indian Industry (CII) President B Muthuraman told reporters here today.

In FY12, agriculture is projected to grow by 3-4%, as against 5.4% growth estimated in FY11, the CII said.

The industrial sector is projected to grow by 7-8% during FY12, as compared to 8% estimated in FY11. The services sector is projected to accelerate by 9.5-9.8% during FY12, it said.

Earlier, the Centre for Monitoring Indian Economy (CMIE), in its latest monthly review, projected the GDP to grow at a brisk pace of 8.8% in FY12.

CII said that high oil prices are a risk to the global economic recovery and sovereign debt problem continues in some European countries and even in the US.

"Inflation remains a concern and downside to growth. Inflation has to be contained, monetary policy alone will not contain inflation. We need to improve supply-side measures and look at productivity improvement," Muthuraman said.

Global commodity and oil prices have led to higher price rise in manufactured goods. This could prompt a more aggressive stance from the RBI, he said.

CII has suggested that government put implementation of 100 mega projects on a fast-track and set a timeline for implementation of the identified projects.

"We advise the government to improve the investment climate and allocation and pricing of natural resources which would help achieve a 10% growth," he said.