Indian economy to grow at 8.5 per cent in current fiscal

The Indian economy is projected to grow at 8.5 per cent in 2010-11 and by 9.0 per cent in 2011-12, compared with a 6.5 per cent growth rate in the 2009-10 financial year.

The projection has been based on a 4.5 per cent growth in agricultural production in 2010-11, against a 0.2 per cent growth in 2009-10 and a contraction of 2 per cent in 2008-08.

The 'Economic Outlook 2010-11' presented by C Rangarajan, chairman, Economic Advisory Council to the prime minister, presented an overall rosy picture of the economy, based on sustained high growth in the manufacturing sector and a normal monsoon this year.

However, the council has projected rising levels of fiscal and current account deficits as also increase in capital flows into the economy over the current year and the following.

Despite the low growth rate, Indian farm sector has been much more resilient to shortfall in precipitation than previously anticipated, the council pointed out.

The agriculture sector in India is projected to grow at 4.0 per cent in 2011-12.