India's GDP growth is expected to slow down to 8.8 per cent next fiscal from the impressive 9.2 per cent projected for this fiscal, a leading economic think-tank said.
Growth in FY 11 has been powered by a rebound in the agricultural sector and a sharp pick-up in private consumption and this growth momentum is expected to continue next fiscal as well, it said.
For FY 12 when growth is expected to slow down, "the downside risks relate mainly to the 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.
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 FY 12 than in FY 11. "Growth in the agricultural and allied sector is projected to decelerate to 3.1 per cent in 2011-12, from the 5.1 per cent growth estimated in 2010-11.
This deceleration explains the marginal drop in real GDP growth in 2011-12," CMIE said. The industrial sector, including construction, is projected to grow lower at 9.4 per cent as compared to the 9.5 per cent estimated in FY 11.
"Steel, cement, automobiles and petroleum products segments are projected to see a nine per cent-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," 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 FY 12 as compared to Rs 3.5-lakh-crore in FY 11.
"This is expected to push up activities in the construction sector. The sector is projected to grow by 10.5 per cent during the fiscal, as compared to an estimated 9.5 per cent in 2010-11," CMIE said.
Growth in the services sector and its segments is projected to moderate in FY 12. The services sector is projected to expand by 9.9 per cent in FY 12, lower than the estimated 10.2 per cent estimated in 2010-11, the think-tank said.