Special Correspondent

CSO data shows downward revision in manufacturing sector growth

“Rising interest rates had not dampened investment intentions of corporates”

NEW DELHI: Enthused by a GDP growth of nine per cent in 2007-08 — the fiscal being the third year in a row — in the wake of an upward revision in farm sector growth, Finance Minister P. Chidambaram on Friday expressed confidence that the economy could repeat its performance during 2008-09 also, despite the higher downward global risks.

Briefing newspersons on the revised GDP estimates released by the Central Statistical Organisation (CSO) here, Mr. Chidambaram said: “I dare say with some degree of confidence that India will show admirable resilience and 2008-09 will also return a growth rate of not less than 8.5 per cent, and if there is some luck I should be able to maintain my track record of 9 per cent growth rate in 2008-09”.

The downward risks were much higher than in the previous year owing to uncertainties such as the U.S. slowdown and rising high crude oil prices, he pointed out and said: “2008-09, globally, has begun on a rather gloomy note. It is more turbulent than even 2007-08. The uncertainties are greater.”

However, despite the gloomy scenario, since the investment-to-GDP ratio has been rising by 9.5 per cent during the last four years to 37.5 per cent from 28.2 per cent, the economy could grow by eight to nine per cent even if some mistakes are made.

“I have no doubt in my mind that if we can sustain agriculture growth, if we can rejuvenate manufacturing and ensure that the services sector continues to grow at double digit,” the economy could grow at close to nine per cent in 2008-09 as well, he said.

The Finance Minister sought to take credit for the fact that the average annual growth GDP rate has worked out to 8.9 per cent during four years of the UPA government. The CSO data, however, showed a downward revision in manufacturing sector growth to 8.8 per cent from 9.4 per cent in the advance estimates, which in turn pulled down the overall industrial growth to 8.5 per cent during 2007-08.

“We will address why there is a slowdown in manufacturing. We will have to take some corrective measures... and we will take those corrective measures,” Mr. Chidambaram said.

Noting that rising interest rates had not dampened investment intentions of corporates, he said the rates have to be so carefully calibrated that it served both functions — moderating inflation and stimulating growth.

“We have to ensure that the instrument of interest rates moderates inflation but, at the same time, does not dampen growth, but promotes growth,” he said.

The surge in agriculture led the CSO to hike the growth rate to nine per cent from 8.7 per cent estimated in February. The nine per cent growth follows the 9.6 per cent growth in 2006-07 and 9.4 per cent in 2005-06. According to the revised estimates, the per capita income at constant prices (1999-2000 prices) has also grown by 7.8 per cent to Rs. 24,321, while at current prices it works out to Rs. 33,299, showing an increase of 12.3 per cent.