Recovery on track: GDP to grow at 7.2 per cent
India’s gross domestic product (GDP) — the total income of all economic entities in the country — will grow at 7.2 per cent in 2009-10, an official forecast said on Monday, confirming signs of a turnaround amid worries about the drought-hit farm sector.Turning the cornerbusiness Updated: Feb 09, 2010 01:27 IST
India’s gross domestic product (GDP) — the total income of all economic entities in the country — will grow at 7.2 per cent in 2009-10, an official forecast said on Monday, confirming signs of a turnaround amid worries about the drought-hit farm sector. Turning the corner
The GDP forecast put out by the Central Statistical Organisation (CSO), however, is a shade lower than projections by the Reserve Bank of India (RBI) and the Finance Ministry.
The ministry, in its mid-term review of the economy in December, had pegged the current year’s growth at 7.75 per cent while RBI had projected the economy to grow at 7.5 per cent.
“This is an advance estimate,” finance secretary Ashok Chawla said. “What we normally see when the final numbers come out for the third and fourth quarters (in May) is an upward bias and we are sure that the same is going to happen this year too.”
The latest data could set the tone for withdrawal of stimul-us measures announced last year to counter the downturn. All eyes will be on Budget 2010, to be presented later this month.
“In terms of what the future policy framework is going to be, I think you will have to wait for the budget,” Chawla said.
The bad news: agricultural production is expected to shrink by 0.2% as a result of last year’s drought.
Growth of the Indian economy slowed to 6.7% in 2008-09 after growing at close to 9% for four straight years before the meltdown hit home in September 2008.
A Chinese official said India had the potential to overtake China as the world’s fastest growing economy. China’s GDP grew by 8.7 per cent in 2009.
“India attaches more importance to knowledge and technology innovation in the development of the new-and-high tech industries,” said Dai Xianglong, chairman of China’s National Council for Social Security Fund, while speaking at the DSP Merrill Lynch Investor Conference in New Delhi. “In future, the economic growth rate of India is likely to exceed China’s.”
India Inc said it is too early to roll back the stimulus package.
“It is important to maintain the policy framework so as not to throttle the growth momentum,” said FICCI's President Harshpati Singhania.
Chief Economic Advisor Kaushik Basu said the data confirms the economy has turned round the corner. “It (advance estimate) confirms what earlier was a matter of speculation, that the country has clearly turned from the downturn,” he said.
The percentage growth under the eight categories of business activities for this fiscal are as under, with figures for previous fiscal in brackets:
- Overall gross domestic product: 7.2 (1.6)
- Agriculture, forestry and fishing: -0.2 (1.6)
- Mining and quarrying: 8.7 (1.6)
- Manufacturing: 8.9 (3.2)
- Electricity, gas and water supply: 8.2 (3.9)
- Construction: 6.5 (5.9)
- Trade, hotels, transport and communication: 8.3 (7.6)
- Financing, insurance, real estate business services: 9.9 (10.1)
- Community, social and personal services: 8.2 (13.9)