India's GDP to grow by 6.6% in FY10: CMIE

Despite falling exports, the Indian economy would grow by 6.6 per cent in the current fiscal on the back of strong domestic market and resilience, economic think-tank Centre for Monitoring Indian Economy (CMIE) said.

However, the economy is likely to bounce back to 9 per cent growth path by 2010-11 when the impact of poor exports demand is overcome.

"Growth during 2009-10 will be a combination of two very divergent stories... In 2009-10, real GDP will grow by a tepid 6.6 per cent," CMIE said in its monthly review of June.

The divergence relate to the resilience and handsome growth of domestic markets and to the falling international demand which is adversely affecting India's exports, trade, transport and export oriented industries, it said.

Though export accounts for 13 per cent of India's GDP, the impact of that on the trade and tarnsport sectors would have a "significant impact on India's GDP computations in 2009-10".

Trade and transport sectors have a cumulative 20 per cent share on the GDP.

"Once this direct and indirect impact of poor exports demand is overcome, India is expected to bounce back to its nine per cent growth trajectory. We expect this to happen in 2010-11," CMIE said.

Prime Minister Manmohan Singh had on June 9 said that the GDP would expand by at least seven per cent during 2009-10. Private sector lender HDFC Bank revised India's growth forecast upwards to 6.5 per cent for this fiscal on the back of increase in demand and signs of recovery in industrial production.

Withstanding the global liquidity crisis, the Indian economy surprised many by growing by 5.8 per cent in the last quarter of the previous fiscal driven by growth in trade, finance and community, social and personal services.

"The finance, insurance, real estate and business services group is expected to grow by 9 per cent. The overall services sector is expected to grow by 8.2 per cent," CMIE said.

India's GDP grew by 7.7 per cent in during the first half of 2008-09.