Wednesday, February 11, 2009

Indian GDP growth projections

The Central Statistical Organization (CSO) in its quick estimates of the national income in 2008-09 estimated India's GDP growth rate to be 7.1%, a climbdown by two percentage points after three consecutive years of 9% plus growth. The Prime Minister's Economic Advisory Council had estimated the growth rate at the same 7.1% and the Reserve Bank of India at 7%. Both agriculture and industry, the primary drivers of growth, are expected to be spearhead the decline, falling from 4.9% to 2.6% and from 8.1% to 4.8% respectively. Services sector is expected to survive relatively unscathed, thanks to government spending on welfare and fiscal stimulus, besides the Pay Commission handouts.

The IMF has projected (comparison here) India's GDP to grow at 6.3% in 2009, revising it downwards from an earlier estimate of 6.9%. Its estimate for 2008 growth rate is 7.8%. It also projects the Indian economy to consistently outpace the world economy.

The agriculture growth projections, while lower, are not as bad as the figures would suggest. The growth in foodgrain production over the past three years, as the figure below indicates, has been impressive, thereby ensuring that the growth projections are made from a steep base.

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