India's real GDP growth is expected to grow by 8.8% in FY 12 after having grown a tad faster, at 9% in FY 11, the Centre for Monitoring Indian Economy (CMIE) has said.
"In FY 12, the Indian economy is projected to grow at a brisk 8.8%. The agricultural and allied sector is projected to grow by 3.3% in FY 12, on top of the 5.4% growth estimated in FY 11," the city-based think-tank said in its monthly review.
Growth and inflation would remain high in FY 12, it observed.
Inflation has remained high long enough for even those who were the proponents of growth against low inflation till recently to start worrying about inflation. The Government has effectively backed RBI's 50 basis point interest rate hike on recent policy. This was the seventh hike in interest rates by the Central bank in 11 months.
Inflation climbed down from its peak of 16% year-on-year in January 2010, but it remained in double-digits till July. It has not fallen even much thereafter. Between August 2010 and March 2011, WPI-inflation was between 8.5% and 9.5%.
The Government has expressed fears that high inflation and high crude oil prices may hurt growth. They have therefore expressed solidarity with RBI's hike in interest rates to rein in inflation.
According to analysts, inflation is influenced much more by global commodity price trends and by higher employment caused by new capacities than by the levels of interest hikes announced by the RBI.
