Chandigarh : Sanjay Pahwa : Advance estimates of GDP at 8.6% are in line with our expectations however, the pattern of consumption is a major worry as the share of final consumption has been estimated lower at 68.3% of GDP in 2010-11 as compared to the 69.7% of GDP estimated in 2009-10, Mr Salil Bhandari, President, PHD Chamber, said in a press release issued here on Monday.
The advance estimates indicate that growth dependency on exports is increasing as net contribution of exports in GDP is estimated higher at (-) 3.7% in 2010-11 as compared with (-) 5.2% in 2009-10. Considering the fragile recovery scenario in the advanced economies, India should maintain its final consumption at higher level, Mr Bhandari said.
The gross fixed capital formation as a % of GDP is also estimated lower at 29.3% of GDP in 2010-11 as compared to 30.8% registered in 2009-10. The exit from the fiscal stimulus measures through the partial rollback of indirect tax cuts in the FY2010-11 budget and gradual tightening of the monetary policy during the last one and half years has not helped either way, food inflation is still hovering at higher double digit levels and industry growth has slowed to 2.7% (YoY) during November 2010, he added.
The RBI should refrain from further monetary tightening measures to curtail inflation. Instead it should address the supply side bottlenecks to contain inflation. Tight monetary policy may not be an effective tool to control inflation which is mainly due to supply side constraints. The continuous tightening of the monetary policy may moderate the domestic demand scenario, Mr Bhandari Pointed out.
However, overall estimates of real GDP at 8.6% are encouraging, which is also supported by the agriculture sector activity with a growth of 5.4%. The growth rate of industry and services are estimated at around 8% and 10%, respectively, the release added.