Dark lining has a silver cloud: Growth closer to 9% last yr

While rising inflation and the shadow of a slowdown haunt the Government, it has some reason to cheer.

While rising inflation and the shadow of a slowdown haunt the Government, it has some reason to cheer. According to the revised estimates of national income, scheduled to be announced on May 31, economic growth rate for 2007-08 is projected to be closer to 9 per cent than the advance estimate announced in February.

A GDP growth rate of 9 per cent in 2007-08 means India will have posted 9 per cent plus economic growth rate for three years in a row. In 2006-07, India grew 9.6 percent and in the previous year 9.4 per cent. The final GDP figures will come in January 2009.

On February 7, the Central Statistical Organisation had projected GDP to grow 8.7 per cent at Rs 33,89,614 crore in 2007-08.

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According to government officials, the higher growth rate of almost 9 per cent in 2007-08 is largely due to a sharp upward revision in agricultural growth rate to 3.4 per cent from 2.6 per cent in the revised estimates. “This will add about 0.2 per cent to the overall GDP,” said an official.

He, however, said there might be some moderation in the growth rate of the industry, especially manufacturing.

The revised estimates, in a way, indicate that the monetary tightening by the Reserve Bank of India (RBI) to tame inflation has not affected growth to the extent feared by many.

The robust growth rate, despite a string of monetary measures last year, also gives the government and the RBI leeway to further tighten the belt without hurting growth prospects.

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A Finance Ministry official pointed out that the growth in 2006-07 was initially estimated at 9.2 per cent in February 2007. It was revised upwards to 9.4 per cent in May 2007 and further to 9.6 per cent in the CSO’s quick estimates in January this year.

The advance estimates of 8.7 per cent for 2007-08 in February this year were based mostly on data for various sectors for the April-November 2007 period.

The May 31 revised estimate will be based on data for the entire year.

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