Govt may project 8.5% economic growth for 2010-11

Buoyed by higher tax collections and improvement in farm growth, the government is likely to peg economic growth at about 8.5% for 2010-11, in its advance estimates to be released on Monday.

"The ministry of statistics and programme implementation is likely to project about 8.5% gross domestic product (GDP) growth in the current fiscal in its advance estimates," a ministry official said.

Encouraged by a better than expected 8.9% growth in the first half of the current fiscal, the government would also up the per-capita income of India by 6-7% during the fiscal 2010-11.

Per capita income of Indians grew by 14.5% to Rs46,492 in 2009-10, from Rs40,605 in the year-ago period.

The official said agriculture sector is expected to grow at 6-7%, as against 0.4% growth in 2009-10.

Though manufacturing growth has been a matter of concern during the third quarter ending December, the government could maintain its 8.5% growth target in its advance estimates, the official said.

This is because of higher tax collections and improved agriculture growth due to lower base last year.

Tax collections during the current fiscal are likely to exceed the budgetary target by about Rs37,000 crore, at Rs7.82 lakh crore.

The government has also revised the target for direct tax collection for this fiscal to Rs4.46 lakh crore, from Rs4.30 lakh crore.

Also the indirect tax estimate has been hiked from Rs3.15 lakh crore to Rs3.36 lakh crore, indicating increased economic activity.

The advance estimates for the previous fiscal (2009-10) had pegged the growth rate for the country at 7.2%.

However, the country's growth rate was finally revised upwards to 8%.

The higher expansion suggests that India is recovering fast from the impact of the global financial crisis, which pulled down the GDP to 6.8% during the fiscal 2008-09, from over 9% recorded in the preceding three years.

The main concern of the government is to address the high inflation in the manufacturing sector which is in the range of 5-6% as against a desired level of 2-2.5%.

However the manufacturing growth has been in double digit in the first two quarters in this fiscal (April-June and July-September), though it came down to single digit in October and November (in the third quarter).