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India’s GDP to grow 9.5% in 2008-09

India’s economy is expected to expand by 9.5% in the current 2008-09 fiscal year, driven by large capacity additions, a Mumbai-based think-tank said on Tuesday.

The Center for Monitoring Indian Economy (CMIE) said the slower growth in last fiscal was an aberration and expects growth to rebound this year. The government estimates 2007/08 growth at 8.7% from 9.6% in the previous year. “Our optimism stems from the fact that capex boom in India continues with more and more fresh investments getting announced quarter after quarter,” CMIE said, in its monthly review. CMIE’s growth forecast for 2008/09 is much higher than the projections of other analysts.

Last week, Lehman Brothers cut its GDP growth forecast for the fiscal year that began on April 1 to 7.6% from 8.3%. HSBC and JP Morgan expect the GDP to grow 7%. Manufacturing and construction industries will power the economy in 2008-09, CMIE said. While services may grow 10.6%, industry is expected to expand 11.4% and agriculture may grow by 2.9%, it said. CMIE expected average inflation to climb to about 5.5% in 2008-09 from 4.5% in 2007-08. (The Economic Times)