Economy may grow by over 8% in 2005-06: Prez
Growth in the first half of the fiscal year stood at 8.1 per cent boosted by a pick-up in manufacturing.india Updated: Feb 16, 2006 17:40 IST
The Indian economy is likely to grow by more than 8.0 per cent in the financial year ending in March, President APJ Abdul Kalam told a joint session of the parliament on Thursday.
He said the inflation rate had remained moderate despite a sharp increase in global energy prices.
"So it is a matter of immense satisfaction that even in the face of an unprecedented rise in global oil prices, the Indian economy has performed exceedingly well," Kalam said as he inaugurated the budget session.
India has one of the world's fastest growing economies, although it still lags heavyweight China, which grew at 9.9 per cent in 2005.
Growth in the first half of the fiscal year stood at 8.1 per cent compared with a year earlier, boosted by a pick-up in manufacturing as healthy rural earnings translated into higher domestic spending.
Normal monsoon rains during July to September boosted farm output, and with villages home to 60 per cent of India's billion-plus population strong farm output typically leads to higher demand for goods and services.
Industrial output, which accounts for a quarter of GDP, has also been rising to meet demand for cars, televisions and other consumer goods from young consumers earning higher salaries in the booming technology and back-office service sectors.
The service sector, accounting for a little more than half of GDP, is also growing at a fast clip.
Kalam listed the programmes being undertaken by the ruling Congress-led coalition to improve the living conditions of the country's 260 million poor.
He said the government is taking steps to shore up the country's infrastructure -- from roads to ports and airports -- to help sustain rapid economic growth.
"My government places special emphasis on improving the power situation in the country," Kalam said, adding that the power ministry was working on five power projects with a capacity of 4,000 megawatt each.
"More such power projects will be taken up to bridge the demand-supply gap."
Power-hungry India faces a stifling energy crisis after a decade of halting, half-hearted reform, contract disputes and political interference that has scared off most foreign investors.
India produces 112,500 megawatts (MW) of power, but has a deficit of 7-11 percent. Consumption grows by 10 percent a year, but annual per capita usage is only 500 kilowatts hours (kwh), compared with China's 939 kwh and 8,747 kwh in the United States.