The Hindu : Business : Economy to grow at 6.9 p.c. in 2004-05

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Tuesday, Feb 08, 2005

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Economy to grow at 6.9 p.c. in 2004-05

By Our Special Correspondent

NEW DELHI, FEB. 7. A sharp dip anticipated in the growth rate of agricultural production is likely to bring down the overall economic growth, as measured by the gross domestic product (GDP), to 6.9 per cent during the current fiscal as compared to the substantially higher growth of 8.5 per cent witnessed during 2003-04.

According to the advance estimates of national income released by the Central Statistical Organisation (CSO) here today, the GDP in 2004-05 at factor cost at constant (1993-94) prices is expected to touch Rs. 1529,366 crores as compared to Rs. 1430,548 crores as per the quick estimates of GDP growth in 2003-04 which was released on January 31.

The CSO data reveal that the rate of GDP growth during 2004-05, expected at 6.9 per cent, could have been still lower but for the comparatively better performances witnessed in some other major sectors such as mining, manufacturing, electricity, gas and water supply, construction, trade, hotels, transport and communication, financing and insurance, real estate and the services segment.

The farm sector was maily responsible for the scaled-down GDP growth during 2004-05. This sector is likely to show a far lower growth rate of 1.1 per cent this year as compared 9.6 per cent in the previous year. The Department of Agriculture and Cooperation, the CSO says, has reported that the production of foodgrains, oilseeds and sugarcane this fiscal is expected to decline by 2.7 per cent, 1.2 per cent and 0.9 per cent, respectively.

The only silver lining is in the production of cotton which is expected to show a growth of 23.8 per cent during the year over 2003-04.

In keeping with the lower GDP growth projections, the growth in national income during the year is also expected to be lower at 7 per cent as compared to the 9 per cent growth achieved in 2003-04.

At factor cost at constant (1993-94) prices, the CSO has pegged the net income at Rs. 1354,385 crores during 2004-05 as against the quick estimate of Rs. 1266,005 crores for the previous year.

Similarly, the per capita income during the current year in real terms (at 1993-94 prices) is also likely to be at Rs 12,414 as against the 2003-04 quick estimate of Rs 11,799, which though higher, depicts a lower growth rate of 5.2 per cent when compared to the previous year's estimate of 7.1 per cent.

At current prices, however, the data on growth in GDP, national and per capita income for the current fiscal present a much brighter picture. For instance, according to CSO's advance estimates, the GDP, likely to be at Rs. 2838,123 crores, works out to a growth of 12.6 per cent over Rs. 2519,785 crores as revealed in the quick estimates of GDP for 2003-04.

Likewise, while the national income at current prices is anticipated to be 12.9 per cent higher at Rs. 2542,921 crores during 2004-05 as compared to Rs. 2252,070 crores in the previous year, the per capita income has also been estimated 11.1 per cent higher at Rs 23,308 as against Rs 20,989 in 2003-04.

As for the sectoral specifics which helped in the current year's GDP growth, the latest estimates available on the Index of Industrial Production (IIP) show that the index of mining, manufacturing and electricity clocked growth rates of 4.9 per cent, 8.9 per cent and 6.7 per cent, respectively during April-November this fiscal as compared to the growth rates of 4.1 per cent, 7.1 per cent and 3.2 per cent witnessed during the same period a year ago.

The construction sector according to the CSO data, is expected to show a growth rate of 5.7 per cent during 2004-05, mainly on account of growth in production of 6.8 per cent in cement and 3.8 per cent in steel during April-December 2004-05, as against the growth rates of 5.6 per cent and 11.8 per cent, respectively during the like period in the previous year.

As for services, the estimated growth in GDP for trade, hotels, transport and communication sectors during the current year has been pegged at 11.3 per cent, mainly on account of a growth of 8.6 per cent in the gross trading index, 8.2 per cent in net tonne kilometres of Railways, 11.1 per cent in cargo handled at major ports, 30.4 per cent in the production of commercial vehicles, and 30.3 per cent in stock of telephone connections during April-December 2004-05.

According to the CSO statement, the advance estimates are based on the anticipated levels of agricultural and industrial production, analysis of budget estimates of Government expenditure and performance of key sectors available thus far while the data at current prices are derived by estimating the implicit price deflators at the sectoral levels from the relevant price indices.

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