Buoyed by the prospects of a strong recovery in the agricultural sector, the Centre for Monitoring Indian Economy has revised upwards its growth forecast for the country's economy to 7.4 per cent for 2003-04 from the earlier estimate of 6.5 per cent.

The growth in the real Gross Domestic Product would be led by 10.7 per cent rise in agriculture and 7.3 per cent in the services sector during the current fiscal, CMIE said in its monthly economic review in Mumbai on Friday.

However, the industrial sector growth forecast remains unchanged at five per cent for 2003-04, the think-tank said.

The revised growth estimates for the economy essentially reflect the handsome recovery in the farm sector from the drought conditions of the previous year, CMIE said.

In July 2003, the economic think-tank had predicted a real GDP growth of 6.5 per cent for 2003-04, based on 9.7 per cent growth in agriculture and 7.5 per cent rise in value addition in the farm sector as a whole.

Regarding the industrial sector, CMIE said metals and automobile sectors are expected to perform better while the machinery sector is likely to perform a little worse.

The services sector would continue to grow at a healthy pace in the remaining part of the financial year. Trade, hotel, transport and communications sector, which grew by 9.6 per cent in the first quarter, are expected to show a growth of eight per cent for the year as a whole, CMIE added.

CMIE said the area coverage of most kharif crops have progressed satisfactorily till September end. The area sown under maize, pulses and soyabean exceeded the normal pattern.

Agricultural production is expected to witness 13.8 per cent growth in 2003-04 as against a 12.4 per cent decline recorded in 2002-03, it said.

The performance of certain segments of industrial sector like transport equipment, basic metals, plastics, wood and wood products in April-July 2003 has been exceptionally good, CMIE added.

However, decline in production of cotton textiles and textile products were a major setback during the first four months of the current financial year. The services sector was estimated to have grown at 7.6 per cent in the first quarter of FY-04 (7.7 per cent in same period in FY-03). Growth in commodity and personal services slowed substantially to 4.3 per cent in Q1, it said.