“The economy is expected to better the H1 growth of 8.9 per cent in H2. We expect a higher 9.7 per cent growth in H2, propelled by the farm sector coupled with the trade, transport, communications and hotel segments of the services sector,” Centre for Monitoring Indian Economy (CMIE) has said in its monthly review of the economy for January.
It further said performance of the other segments of services sector like finance, insurance and realty will also improve on the back of strong credit offtake.
Driven by a robust growth in the first two quarters, the Finance Ministry had in December revised upward its growth projection for the full fiscal to over 9 per cent, up from 8.5 per cent it had projected in the Budget.
But it seems renewed optimism is losing its sheen as the economy entered the last quarter, primarily because of the wayward ways of food inflation well as the headline inflation, driven by a massive rise in the prices of certain vegetables like onions and tomatoes and the rising crude oil prices.
After touching an an “unacceptably high” 18.32 per cent for the week ended December 25, food inflation dipped by a tad to 16.91 per cent for the week ended 1st January.
But this pushed up headline inflation which broke its downward trend first time in many months to 8.43 per cent in December, up from 7.48 per cent in November, forcing government to press the panic button to batten down price rise.