CMIE projects 8.8% GDP growth for FY12

India's GDP is projected to grow at a brisk pace of 8.8% in 2011-12 (FY12), a leading economic think-tank said today.

The domestic environment is conducive for growth and private final consumption expenditure is projected to grow by a healthy 7.5% and gross fixed capital formation by 14.6%, the Centre for Monitoring Indian Economy (CMIE) said in its latest monthly review of the country's economy.

In FY11, the performance of India's economy has been robust, it said, adding that the real GDP is estimated to have grown by 9% during the fiscal.

"This has been powered by a rebound in the agricultural sector following the drought in 2009-10, and a sharp pick-up in private consumption and gross fixed capital formation," CMIE said.

In FY12, the agricultural and allied sector is projected to grow by 3.1%, on top of the 5.1% growth estimated in 2010-11. This will be the third consecutive year of positive growth, it said.

The industrial sector, including construction, is likely to grow by 9.4% during 2011-12, as compared to 8.5% estimated in 2010-11.

Growth in industrial production will be driven by a rise in consumption demand and investment demand, it added.

"Consumption demand, in turn will be driven by a rise in corporate wages, fresh employment generation and relatively lower inflation," the economic think-tank said.

Investment demand is expected to remain buoyant, as more and more projects move into the implementation stage, it said.

CMIE said activities in the construction sector are expected to be pushed-up as projects worth Rs 8-lakh-crore are scheduled to be commissioned in FY12, as compared to Rs 3.5-lakh-crore in FY11.

"The sector is projected to grow by 10.5% during the fiscal, as compared to an estimated 9.5% in 2010-11," it added.

Growth in the services sector and its segments is projected to moderate marginally in 2011-12. The services sector is projected to expand by 9.9% during 2011-12, as compared to an estimated 10.2% in 2010-11, it said.