India's GDP growth is expected to slow down to 8.8% next fiscal from the impressive 9.2% projected for this fiscal, a leading economic think tank said.
Growth in FY11 has been powered by a rebound in the agriculture sector and a sharp pick-up in private consumption and this growth momentum is expected to continue next fiscal as well, it said.
For FY12, when growth is expected to slow down, "the downside risks relate mainly to poor rainfall and to the performance of the global economy," the Centre for Monitoring Indian Economy (CMIE) said in its latest review of the country's economy here.
Growth in the agricultural and allied sector, industrial sector and in the services sector and its segments is expected to decelerate, it said.
However, the construction sector is expected to fare better in FY12 than in FY11.
"Growth in the agricultural and allied sector is projected to decelerate to 3.1% in 2011-12 from the 5.1% growth estimated in 2010-11. This deceleration explains the marginal drop in real GDP growth in 2011-12," the CMIE said.
The industrial sector, including construction, is projected to grow at a slower pace of 9.4% in FY12 as compared to the 9.5% estimate for FY11.
"Steel, cement, automobiles and petroleum products segments are projected to see a 9%-plus growth in 2011-12. Other industries like paints and varnishes, tubes and pipes, sponge iron, lifts and elevators, domestic refrigerators and transformers are expected to do well too," the CMIE said.
Industrial production growth will be driven by a rise in consumption and investment demand, it said.
Consumption demand will be driven by a rise in corporate wages, fresh employment generation and lower inflation, while investment demand is expected to be buoyant as more and more projects move into the implementation stage, it said.
Projects worth Rs 8 lakh crore are scheduled to be commissioned in FY12, compared to Rs 3.5 lakh crore in FY11.
"This is expected to push up activities in the construction sector. The sector is projected to grow by 10.5% during the fiscal, as compared to an estimated 9.5% in 2010-11," the CMIE said.
Growth in the services sector and its segments is projected to moderate in FY12.
The services sector is projected to expand by 9.9% in FY12, lower than the 10.2% estimate for the 2010-11 financial year, the think-tank said.