GDP to grow at 9.5 pc in FY09: CMIE

MUMBAI: India's real GDP is expected to grow at an impressive 9.5 per cent in FY09, the Centre for Monitoring Indian Economy said in its monthly review here.

The Indian economy is heading towards the fourth consecutive year of an over 9 per cent growth and like in the last five years, growth this year too was expected to be driven by capital investments happening in India, CMIE said.

As per CMIE CapEx Service, projects worth Rs 3.4 lakh crore are scheduled for commissioning in FY'09. This would be the highest ever completion of investments in the Indian history, CMIE said.

The current growth phase of the Indian economy is driven by the capital investment boom in the country. India's GDP started rising by over eight per cent since FY'04. And, the gross capital formation (GSF) grew in the range of 13-23 per cent during this period.

CMIE expects growth in GSF to accelerate to 18.7 per cent in FY'09 from 13.4 per cent in FY'08. This robust growth in GSF is expected to more than offset the moderation in the growth in private final consumption expenditure (PFCE) and Government final consumption expenditure (GFCE).

CMIE stated that the PFCE is expected to grow by five per cent in FY'09, after growing by 7-9 per cent in the preceding three years. While the slower growth in the PFCE would mainly be on account of the higher base last year, the prevailing high inflation would also affect the consumption demand to some extent.

However, inflation is not expected to depress the PFCE dramatically as income levels in India have also gone up significantly in the last one year.