With improved prospects for the farm sector, Centre for Monitoring Indian Economy on Friday raised the economic growth forecast for 2005-06 to 6.8 per cent from the earlier six per cent.
The higher growth reflects the upward revision of growth in the agriculture and allied sectors, which are now expected to grow at three per cent in 2005-06 as against 0.7 per cent decline projected earlier, CMIE said in a release.
This increase in the estimates was due to the revival of the monsoon from the last week of June, which substantially improved the prospects for the agriculture sector, it said.
The enhanced precipitation and monsoon's improved spatial distribution were responsible for the recovery in sowing for the kharif season, it added.
The foodgrain production was projected to go up by 1.5 per cent to 208.5 million tonnes compared to the earlier forecast of 203.5 million tonnes, it said.
The economic growth, measured by real Gross Domestic Product, would be led by the manufacturing sector CMIE said, adding this sector would grow at 8.5 per cent as estimated earlier.
The construction industry was expected to grow at 10 per cent due to acceleration in investment activity during the year, it said.
The economic think-tank maintained its growth forecast for the service sector, which accounts for 50 per cent of GDP, at 7.5 per cent. This growth would largely come from trade, hotel, transport and the communications sectors.
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