Chief Economic Advisor Kaushik Basu today said the Indian economy is likely to grow by 8.9 per cent in the first quarter of the current fiscal compared to 8.6 per cent in the previous quarter.
"...This quarter, the quarter that we have entered... 8.9 per cent growth in this quarter is something we can expect. We had 8.6 per cent in the last quarter," Basu said at a press conference.
Basu's observation assumes importance since industrial production grew 17.6 per cent in April, marking double-digit expansion for the straight seventh month.
Manufacturing, which constitutes around 80 per cent of industrial growth, expanded 19.4 per cent in April. Within manufacturing, capital goods production rose by 72.8 per cent in April, while consumer durable rose by 37 per cent.
Basu said industrial growth was phenomenal in April, adding that the rise in capital goods manufacturing shows "optimism" in the corporate sector, while expansion in consumer goods production is a sign of durable growth.
"...Two segments of the Index of Industrial Production which are doing well -- capital goods and consumer durables. A sharp increase in capital goods production is a bit of a sign there is optimism in our corporate sector. The other one is consumer durables, which is a sign of durable growth... It is a good sign," Basu added.
He said the rise in manufacturing is significant, since the sector is labour-intensive, unlike services. This will have a positive impact on employment generation, which is far more important than growth itself, he said.
After registering over 9 per cent growth in the three preceding years, India's economic growth slipped to 6.7 per cent in 2008-09.
However, the Indian economy recovered in the last fiscal by registering a growth of 7.4 per cent, led by 8.6 per cent growth in the last quarter of 2009-10.
For the current fiscal, Prime Minister Manmohan Singh and Finance Pranab Mukherjee have pegged the growth rate at 8.5 per cent.
