Indian economy to grow by 8.3 pc in FY11: Dun & Bradstreet

NEW DELHI: Driven by strong industrial and services growth, India's economy is expected to expand by 8.3 per cent during the current fiscal, consultancy firm Dun & Bradstreet (D&B) said today.

"Assuming a normal monsoon, we expect GDP growth to surge 8.3 per cent during the financial year 2010-11, driven by robust industrial growth and resilient performance of the service sector," D&B said in a report.

Besides, it said that rise in consumption demand is likely to contribute majorly to the economic growth and help augment investments.

Healthy income levels on account of faster pace of job creation as well as broadening of tax slabs -- as proposed in this year's Union Budget -- will create higher disposable income with consumers, driving up demand.

"In response to the pick-up in domestic consumption, we expect to see a robust 10.3 per cent growth in the Index of Industrial Production in FY11," D&B said.

The consultancy firm said it is "fairly sanguine" about India's export growth and expects it to contribute to the GDP expansion.

While it projected export growth in FY11 at 19.9 per cent, D&B said imports will expand at a faster pace of 30 per cent.

Listing the possible downsides -- apart from a below normal monsoon -- that could mar the growth projections, D&B said, "Unfortunately, there will be enough impending risks that would push WPI (wholesale price) inflation to levels much higher that it will be in FY'10."

It added, "The commodity price surge can exacerbate inflation expectations, put pressure on companies' profit margins, thus accentuating the risk of overall inflation rate moving upwards."

Rising inflation, in turn, is likely to force the Reserve Bank to hike policy rates that may lead to risk on GDP growth, it said.

On the long term projections on India's economic growth, D&B said that for an average growth of around 9.5-10 per cent in the next five years, the country's investment rate should touch a high of 39-40 per cent of GDP.