CSO forecasts 8.1% growth in 2003-04

The Indian economy is powering ahead and is expected to grow by 8.1 per cent in 2003-04, making it one of the fastest growing economies in the world, according to advance estimates by the Central Statistical Organisation (CSO).

The CSO's estimates imply that growth in the second half of the fiscal year will touch 9 per cent as gross domestic product (GDP) grew by 7 per cent in the first half of the year.

The growth figures have been boosted by a strong performance in agriculture and double-digit growth in trade, hotels, transport and communications according to the advance estimates of national income released by the CSO today. In addition, a good performance in a range of manufacturing industries has helped to drive growth figures upwards sharply.

The advance estimates are based on estimates of agricultural and industrial production and an analysis of budget estimates of government expenditure. Also taken into consideration are the performance of key sectors like, railways, transport, communication, banking and insurance. Economic growth was only 4 per cent in 2002-03 as per the quick estimates (QE) of national income released in January.

The good monsoon is, according to the CSO, having a major impact on economic growth as it is likely to push up crop production and send agricultural growth zooming to 9.1 per cent in 2003-04. That compares with a 5.2 per cent drop in production in 2002-03.

Similarly, there has been a sharp pick up in sectors like hotels, transport and communication and trade and GDP growth is likely to be in the region of 10.9 per cent. Also, the production of commercial vehicles is likely to rise by 31.4 per cent and the number of telephone connections by 35 per cent.

The manufacturing sector is expected to clock 7.1 per cent growth, up from 6.2 per cent in 2002-03.

However, there is likely to be a slowdown in sectors like construction which is expected to grow at 6 per cent in 2003-04, down from 7.3 per cent in the previous fiscal.

The growth estimates for construction are based on expected 5.6 per cent growth in cement production and 7.1 per cent in steel during April-December 2003-04. That compares to 9.7 per cent and 9.1 per cent respectively during April-December 2002-03.

The finance, insurance, real estate and business services' sector, are expected to grow at 6.4 per cent during 2003-04, down from 8.8 per cent in 2002-03.

In the current fiscal, 11.6 per cent growth in aggregate deposits and 12.3 per cent growth in bank credit during December 2002 to December 2003 drove growth.

The government has already indicated that it expects growth of 7.5 per cent to 8 per cent growth for the fiscal, so, the CSO estimates are unlikely to lead to any significant change in the revised estimates for fiscal deficit.

Seeking to take credit for the over 8 per cent economic growth expected for 2003-04, the government today said that other than the good monsoons, it was investment decisions taken by it, leading to improved performances of the manufacturing and services sector, which pushed up the growth path.

Finance Secretary DC Gupta, today said that measures taken by the government, including those on capital investment had facilitated growth and that he was hopeful that the momentum would continue. "The government focus is to remove impediments to growth," Gupta said.

The period between 1994-95 and 1996-97 saw 7 per cent plus growth. According to an analysis, investment had a large role in sustaining it, Gupta told reporters, adding that since the government was focusing on investment now also, the growth should be sustained.

In the interim budget, the government has initiated investment in three critical sectors -agriculture, infrastructure and small scale enterprises-and this should help in sustaining growth, he said.

The lower growth in construction this year is on account of the high base effect of the previous years boom. On the whole, the country was doing better-non-oil imports were up, corporate results were better and was non-food credit offtake was up, he said.