Real GDP to grow 9.2% in 2010-11: CMIE

Despite apprehensions of a low growth in gross domestic product for the second quarter, the Centre for Monitoring Indian Economy (CMIE) has projected that the economy will grow at 8.7 per cent in the second quarter of 2010-11, marginally lower than 8.8 per cent in the first quarter.

The CMIE states the growth to be “remarkable” given that the growth is coming over a high base as the economy clocked a robust growth of 8.6 per cent during the corresponding period in 2009. CMIE further expects the overall growth for the fiscal to stand at 9.2 per cent, much above the government’s expectation of 8.5 per cent.

Economy had grown 6.7 per cent in 2008-09 and 7.4 per cent in 2009-10. The good performance will be boosted by good performances in agriculture and manufacturing sectors.

Harvesting has commenced for the 2010 Kharif crop and the prospects look promising. Crop production this year is expected to be significantly higher than in 2009, as large parts of the country experienced bountiful rain. Kharif foodgrain output is expected to grow by 10 per cent to 114 million tonnes (mt), and rabi by two per cent to 116.6 mt, CMIE stated in its research note.

Cumulatively, production of major agricultural crops is projected to grow by 7.2 per cent in 2010-11, compared to a 6.6 per cent decline in 2009-10.

“We estimate that corporate profits have grown 16.5 per cent in the September quarter, against our earlier projection of a 0.7 per cent. This is because the government announced a cash subsidy of Rs 13,000 crore in October,” said CMIE in its research note.