Indian economy is expected to grow by 7.4 per cent in 2003-04 and the next year is also likely to be good for the country, according to a top official of Centre for Monitoring Economy.

India's Growth Projections for 2003-04

"Inflation will be around 4.5 per cent in FY-04. Even the farm output has increased but volatile agriculture growth is a matter of concern," CMIE managing director and CEO Mahesh Vyas said at the National FMCG Conclave organised by the Confederation of Indian Industry in Mumbai on Tuesday.

Reserve Bank of India, in its mid-term review, has already revised the Gross Domestic Product growth to 6.5-7 per cent, with an upwards bias, compared to earlier projection of around six per cent.

RBI Governor Y V Reddy has also hinted that GDP could grow beyond seven per cent backed by good growth in exports and strong recovery of agriculture sector.

On the volatility in agriculture sector, Vyas said the sector was in trouble in five out of the nine years.

"The biggest ordeal for this sector was not lack of availability but absence of purchasing power in rural markets," Vyas said, adding, "If India can investment more in agriculture and modernise the commodities markets, a major growth will come about."

The growth in last five to seven years has been driven by consumer spending and not investment. It was also important to invest as it would create more jobs and thereby increase spending, the CMIE chief executive said.