While industrialist Ratan Tata recorded India's biggest overseas corporate takeover yet on Wednesday, the government looked back and said last year's growth was even better than thought earlier.
It announced an upward revision of the economy's growth figures for the last financial year (2005-06) to 9 per cent as against 8.4 per cent earlier. But the government is concerned that its talk of 9 per cent growth in the current year may be affected by the higher base set up revision.
Significantly, the revision in growth rate of gross domestic product (GDP) has been primarily driven by higher growth in agriculture sector. As per the revised estimates, the farm sector grew by 6 per cent last year compared with 3.9 per cent estimated earlier.
The growth figures for manufacturing were also marginally revised to 9.1 per cent from the earlier estimates of 9 per cent.
Finance Minister P Chidambaram attributed the high growth rate to the government's investment-friendly policies that boosted savings and investment and made industry more productive and efficient.
He, however, cautioned that the revised estimates need to be seen in the light of a higher base and its impact on the growth rates of the current financial year.
"It (the revised figures) augur well for 2006-07, although, I must caution we will have to see what will be its impact on growth figures this year as the base figures have been revised."
GDP had grown by 4.4 per cent in 2002-03, 8.5 per cent in 2003-04 and 7.5 per cent in 2004-05. The economy grew at 9.1 per cent in the first half of the current financial year.
Economists appear bullish on the growth prospects of the economy in the coming months.
"Based on the evolving nature of the current economic situation and indicators of a prospective nature, we expect the GDP in the second half of the 2006-07 to grow by 8.2 per cent, with a rebound in the performance of agriculture to 3 per cent and a marginal slowdown in the growth of industry and services to 9.1 per cent and 9.7 per cent respectively," said the latest state-of-the-economy report of the Confederation of Indian Industry (CII).
The government said there has been a rise in the level of overall savings in the economy, with Gross Domestic Savings (GDS) accounting for 32.4 per cent of GDP as compared to 31.1 per cent.
A rise in savings by households and private sector corporate entities accounted for the increase in GDS, even though the savings by public sector undertakings (PSUs) registered a decline.
Saving by households, which included both financial and physical assets, increased from Rs 3,18,791 crore and Rs 3,56,043 crore in 2004-05 to Rs 4,16,462 crore and Rs 3,80,655 crore in 2005-06, respectively.
Savings of the private corporate sector went up from Rs 2,23,512 crore in 2004-05 to Rs 2,88,430 crore in 2005-06.
Public sector savings, however, showed a decline from Rs 74,682 crore in 2004-05 to Rs 71,262 crore in 2005-06.
Investment represented by gross capital formation (GCF), accounted for 32.2 per cent of GDP in 2005-06, as against 30.2 per cent in 2004-05.