The Government on Monday pegged economic growth at 7.2 per cent in 2009-10, which was short of the optimistic projections of the Reserve Bank of India (RBI), Prime Minister Manmohan Singh and the Finance Ministry, although it was higher than 6.7 per cent recorded a year ago.
Interestingly, according to advance Gross Domestic Product (GDP) estimates released by the Central Statistical Organisation, farm output is estimated to contract by 0.2 per cent and services to record a moderate growth. Manufacturing is estimated to grow by a robust 8.9 per cent this fiscal.
Bolstered by the stunning 7.9 per cent growth in the second quarter of this fiscal, the Finance Ministry in its mid-term review had projected the economy to grow by 7.75 per cent this fiscal and the RBI had projected the growth at 7.5 per cent. “The stimulus seems to have succeeded and we should begin to phase it now,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here. But the Finance Secretary Ashok Chawla evaded a direct reply on the issue stating everybody should wait for the budget.
According to the CSO, farm and allied activities are expected to shrink by 0.2 per cent this fiscal against 1.6 per cent growth a year ago. The estimated growth this fiscal is estimated to be driven by robust expansion of the manufacturing sector against 3.2 per cent in 2008-09.
The sector had got various stimulus doses from the government in the wake of global financial crisis.
According to the advance estimates, mining and quarrying is likely to grow by 8.7 per cent against 1.6 per cent a year ago, while electricity, gas and water supply by 8.2 per cent (3.9 per cent). Trade, hotel, transport and communication are estimated to rise by 8.3 per cent (7.6 per cent) and construction by 6.5 per cent (5.9 per cent). However, other services like financing, insurance, real estate and business services are likely to witness fall in expansion and grow by 9.9 per cent this fiscal against 10.1 per cent last fiscal and community social and personal services by 8.2 per cent (13.9 per cent).
The government will get statistical advantage of revising the fiscal deficit down at 6.5 per cent of GDP than budget estimates of 6.8 per cent as the size of the economy is pegged higher at Rs.61,64,178 crore this fiscal. The CSO has full actual data for the first half, partial data for the third quarter, and no actual data for the fourth quarter, while putting out advance estimates. That is why the final numbers under go some revision from the advance estimates.
Mr. Ahluwalia said it was his consistent view that the economy was back on seven per cent plus growth rate. He expected the economy to clock better growth rate of 8 per cent next fiscal. As per advance estimates, the per capita income is estimated at Rs.43,749 in 2009-10 compared to Rs.40,141 in 2008-09, a rise of nine per cent.