The Planning Commission today said the pace of economic growth (8.8 per cent) in the quarter to June was on expected lines and that the economy will grow by more than the 8.5 per cent projected for this fiscal.
"It (GDP growth) is on expected lines. The overall GDP growth in this fiscal would be slightly better than 8.5 per cent projected earlier," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.
He said that though the growth rate of the manufacturing sector is likely to be low during the rest of the year, the agriculture sector will register good performance.
The government is targeting 8.5 per cent growth in GDP for the fiscal 2010-11.
"IIP (Index of Industrial Production) growth for the rest of the year will be slow slightly on base effect, though it will remain in double digits overall," Ahluwalia said.
IIP had grown by 7.1 per cent in June, after being in double digits for previous months.
Ahluwalia, however, said that the farm sector will have positive results during the next few months.
"The base effect would have opposite effect on agriculture unlike the case with industrial growth," he said.
As per data released today, the economy grew by an impressive 8.8 per cent during the quarter ended June on the back of robust manufacturing growth, as against 6 per cent in the corresponding quarter of last fiscal.
Agriculture and allied activities grew by 2.8 per cent, higher than 1.9 per cent in the year-ago period.
Manufacturing expanded by strong 12.4 per cent in April-June, 2010 against a mere 3.8 per cent growth rate in the same period last year.
Ahluwalia said that wholesale price inflation will fall to around 6 per cent by December. The inflation had slid back to single digit at 9.97 per cent after five months in July. Food inflation, however, has been above 10 per cent since the last week of July.
When asked if inflation woes would be over soon, Ahluwalia said: "Absolutely."
He, however, said that the current situation is unlikely to lead to the RBI loosening the monetary policy.
"It is certainly true that with the growth being high there is no particular need for loosening monetary policy from the growth point of view," Ahluwalia said.