Strong Projection for Economic Growth in India

With the Indian economy posting a growth rate of 9.2 percent during the July-September period, and a cumulative 9.1 percent during the first half of the fiscal year - the highest ever since the economic reforms were launched in 1991-92, the Indian government is now projecting that annual GDP growth may surpass 9 percent.

However, while making these projections, Indian Finance Minister P Chidambaram voiced a word of caution, saying that inflation was still a cause of concern, though it could be brought under control with effective supply side management. The wholesale price index registered an annual growth rate of 5.45 percent in the 12 months to November 18, higher than previous week's annual rise of 5.29 percent.

On the other hand, the fiscal deficit and the revenue deficit have been lower this year. The fiscal deficit stood at Rs 871 million ($19.5 million) during the first seven months of the fiscal year compared to Rs 920.68 million ($20.6 million) in the corresponding period last fiscal. The revenue deficit was Rs 672.99 billion ($15.07 billion) compared to Rs 702.84 billion ($15.737 billion).

The confident projections were also based on strong second quarter growth despite a relatively poor show by the farm sector which grew by 1.7 percent in second quarter against 3.4 percent in the first quarter.

Manufacturing registered a growth of 11.9 percent in the second quarter compared to 8.1 percent in the corresponding period last year. Trade and communications has been the fastest growing sector among services, 13.5 percent in the six month period.

Overall, the economy is poised to record a growth of over 8 percent for the fourth consecutive year.