The latest government data on industrial growth has painted a gloomy picture but economic think-tank Centre for Monitoring Indian Economy (CMIE) says all is not lost and has pegged the expansion at 10.4 per cent for fiscal 2009.
"We expect the industrial production to grow by 10.4 per cent in FY 09. The current investment boom is expected to correct the slowdown problem," CMIE said in its monthly report.
The reason for the current slowdown in industrial production was the supply problem faced by sectors like cement, aluminium, electricity and steel, it said. India's industrial growth slipped to 5.3 per cent in January as compared to 11.6 per cent in the same month last year as growth in all major sectors comprising manufacturing, electricity and mining declined.
The report also said, "We expect interest rates to start easing in the first quarter, thus, reviving demand for consumer durables."
It expected the country's gross capital formation to increase by 15.5 per cent in FY 09 and continue to drive growth in its GDP.
CMIE said India's GDP was expected to grow by 8.9 per cent in FY 08 and 9.1 per cent in FY 09. The real GDP grew by 7.5 per cent in FY 05, 9 per cent in FY 06 and 9.6 per cent in FY 07.