Taking into account the buoyant performance of the Indian economy in the first half of the current financial year, the Confederation of Indian Industry (CII) has revised its GDP growth estimate for the year from around 8 per cent to 8.6 per cent.
In its State of the Economy report, CII has pointed out that industry and the services sector had grown much faster than expected.
In the first half of 2006-07, while industry recorded growth of 10.3 per cent, services grew by 10.9 per cent, as against the corresponding growth last year of 7.8 per cent and 10.3 per cent, respectively.
However, the agriculture sector continued to be the dampener, with only 1.7 per cent growth in the second quarter of the current year.
An analysis reveals that while industry is likely to improve its performance from 8.5 per cent to 9.1 per cent in the second half of 2006-07, services may witness a slight slowdown from 10.2 per cent to 9.7 per cent.
This is likely to result in a slight decline in growth to 8.2 per cent during the second half of the year, compared with 8.4 per cent in the corresponding period last year.
Despite the likely slowdown, the growth performance is likely to be better than last year. The study also points out that the economy would have performed better had it not been for the climbing inflation and interest rates.
The quarterly study highlights that the robust growth in India would be amidst a rather modest global performance, since a major chunk of Indian products is consumed domestically. It says the growth prospects for the economy were largely insulated from the current global slowdown.
It has cautioned that high growth in manufacturing should not make industry gloss over the poor growth recorded by some of its labour-intensive sectors.
Of the 17 industry sectors under two-digit classification, the study has noted that there are 7 labour-intensive industries -- food products (1.7 per cent), wool, silk and manmade textiles (6.6 per cent), jute and other vegetable fibre textiles (-0.3 per cent), wood and wood products (-2.1 per cent), paper and paper products (7.9 per cent), leather and fur products (-6.5 per cent), metal products and parts (3.9 per cent) -- which recorded low growth in the first half of this fiscal.