The elephant is dancing, it seems. India’s economy, which for decades was stuck with the so-called Hindu rate of growth around 3 per cent, has hit the nine per cent mark for the second year running, and leading economists said on Wednesday that this can be sustained in the coming years.
Gross domestic product (GDP) growth is hovering close to magical double-digit figures and not far behind that of China, the darling of the world’s investors.
The Central Statistical Organisation (CSO) said that GDP adjusted for inflation at 1999/2000 prices would grow by 9.2 per cent in the year ending March, compared with 9 per cent in the previous year.
China’s dragon economy grew 10.7 per cent in 2006. Economists say India’s GDP is also expected to touch $900 billion this fiscal year and cross $1 trillion next year. World Bank data shows that at the end of 2005 only nine economies had a GDP of more than $1 trillion.
“The Government wishes to reiterate that it is reforms that are driving growth. Reforms have brought in investment, fostered competition and enhanced productivity and efficiency,” Finance Minister P.Chidambaram said in a statement after the data was released.
In Mumbai, stocks rallied further on the GDP news, with the benchmark 30-share Sensex touching a lifetime high. “The high growth rates will continue because currently everything is positive in the economy and investor confidence is high,” former Reserve Bank of India governor Bimal Jalan told Hindustan Times.
Prime Minister Manmohan Singh said the recent good performance has generated great global interest in India. “It has contributed to a renewed sense of optimism,” Dr. Singh said at a book release function hours after the data was released.
But agriculture remains erratic, with growth expected to slump to 2.7 per cent from 6 per cent. “As growth accelerates, new constraints have come up. The shortage and poor quality of infrastructure is one such constraint. The shortage of educated and skilled manpower is another constraint,” Singh said.