Indian economy to boom, FM pegs growth at 9%

India's economy will revert to the pre-crisis growth level of 9 per cent in the next financial year.

"The Indian economy is expected to grow at 9 per cent with outside band of (+/-) 0.25 per cent in 2011-12, " Finance Minister Pranab Mukherjee said while unveiling the Budget proposals for 2011-12.

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He said the Indian economy has regained the pre-crisis growth momentum, but there is a need for adjustment in the composition in demand and supply side.

"We have to ensure along with private consumption revival in private investment is sustained and matches pre-crisis growth rates at the earliest," Mukherjee said. Indian economy has already reverted to the high growth path recorded by 8.9 per cent in the first half of the current fiscal.

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As per the CSO data released today, in the third quarter (October-December) the country's Gross Domestic Product (GDP) grew at 8.2 per cent. In the current fiscal, the economy is expected to expand by 8.6 per cent.

Even the pre-Budget Economic Survey tabled in Parliament last week expected the real GDP to grow by 9 per cent (+/-0.25) in 2011-12.

For the current fiscal, the economy is expected to grow at 8.6 per cent, it said.

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The Indian economy had grown at a rate above 9 per cent for three consecutive years, starting 2005-06, before the global financial meltdown brought it down to 6.8 per cent in 2008-09.

Driven by good performance of agriculture and services sector, the Indian economy grew by 8.2 per cent in the third quarter of the current fiscal, up from 7.3 per cent in the corresponding period a year ago.

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According to the data released by the government on Monday, farm sector during the third quarter ending December, recorded a growth rate of 8.9 per cent, up from a decline of 1.6 per cent in the corresponding period a year ago.

The services sector, including financing, insurance, real estate and business services during the same period recorded a growth rate of 11.2 per cent as compared to 8.5 per cent during the same period last year.

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Electricity, gas and water supply is another sector that has done well as it grew at the rate of 6.4 per cent in third quarter compared to 4.5 per cent in the same period last fiscal.

Mining and quarrying growth jumped to 6 per cent in third quarter from 5.2 per cent in the same three-month period last fiscal.

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Manufacturing and construction activity has slowed down, growing at pace of 5.6 and 8 per cent cent, respectively, in the three-month period as against 11.4 and 8.3 per cent respectively in the corresponding quarter.

The government expects the growth to top 8.5 per cent in the current fiscal. The growth rate for the first and second quarters was unchanged at 8.9 per cent each.