Buoyed by the encouraging first quarter GDP numbers, Finance Minister Pranab Mukherjee today expressed confidence that the economy will grow by not less than 8.50-8.75 per cent this fiscal.

"The numbers are quite encouraging ... more encouraging point is 12.4 per cent growth which has been registered in the manufacturing sector. I think the highest growth rate in the last 11 quarters ... I do hope it will be possible to maintain this level of growth," Mukherjee told reporters here.

According to the official data released today, the economy grew by 8.8 per cent during the quarter to June.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6 per cent growth rate in April-June 2009-10.

The show-stopper for the quarter is the manufacturing sector, which expanded by a strong 12.4 per cent in April-June, 2010, against a mere 3.8 per cent growth rate in the same period last year.

The Minister, however, said that more is required in the agriculture sector to ensure sustainable growth.

"I am happy that manufacturing sector has registered satisfactory growth level which means that there has been more employment generation and job creation ..."

"We shall have to reach the 4 per cent growth in agriculture to have sustainable growth ... Keeping that in view, I am quite confident that whatever was projected in the Economic Survey while projecting the Budget for the year that GDP growth will not be less than 8.5 per cent to 8.75 per cent," Mukherjee said.

Agriculture and allied activities grew by 2.8 per cent, higher than 1.9 per cent in the year-ago period, but it is no where between the target of four per cent pegged by the government in the medium term.

Construction grew by 7.5 per cent compared to 4.6 per cent. Among services, financial, insurance and real estate services expanded by just 8 per cent, against a growth rate of 11.8 per cent in the year-ago quarter, while community social and personal services growth slowed down to 6.7 per cent, against 7.6 per cent a year ago.

However, trade, hotels and communication services rose by 12.2 per cent, against 5.5 per cent during April-June 2009.