The Indian economy is projected to grow by 8.6 per cent in 2010-11, the fastest in three years, on the back of a sharp recovery in farm output, but high inflation remains an area of concern.
A growing economy would help the country's annual per capita income expand by 17.3 per cent to Rs54,527 at current prices and by 6.7 per cent to Rs36,003 at 2004-05 prices, according to the advance estimates of national income released today.
Per capita income is calculated by evenly dividing the national income among the country's population.
Finance minister Pranab Mukherjee and the Reserve Bank are however, concerned about high inflation, particularly of food articles.
"All along I was maintaining, it should be around 8.5% plus. 8.6% is accepted," finance minister Pranab Mukherjee said adding, "Now the other issue is inflation, trade balance... these are to be addressed."
In December, general inflation was 8.43% and food inflation for the week ended January 22 stood at 17.05%.
Abundant rains in the last monsoon season would help agriculture and allied activities to expand by 5.4% in 2010-11 compared to just 0.4% in the previous financial year.
Weathering the global slowdown, the Indian economy managed to expand by 8% in 2009-10 and 6.8% in 2008-09.
Expected to grow by a shade better than 8.5% projected by both RBI and the finance ministry, the Gross Domestic Product (GDP) would expand to Rs48.80 lakh crore in 2010-11 at the constant prices (with a base of 2004-05).
The 8.6%GDP growth prospects, however could not cheer markets. The BSE benchmark Sensex closed almost flat at 18037.19 on concerns of inflation and rising interest rates.
While services such as trade, hotel, transport and communications improved to 11% from 9.7%, the manufacturing remains static at 8.8% year on year.
Mining and quarrying is likely to grow by 6.2%, compared to 6.9% a year ago, while electricity, gas and water production will grow up by 5.1%, as against 6.4% in the previous fiscal.
The chief economic adviser in the finance ministry Kaushik Basu said the "target of 9% economic expansion for the next financial year is well with in the reach."