GDP growth for 2003-04 raised to 8.5%

The government today revised upwards the estimate for economic growth in 2003-04 to 8.5 per cent against 8.2 per cent in the revised estimates released last June. In 2002-03, the Indian economy grew at 4 per cent.

The figures released by the Central Statistical Organisation (CSO) today also point to a steep jump in the domestic savings and capital formation rates in the economy.

The domestic savings rate in 2003-04 was 28.1 per cent, as per the quick estimates released today, against a rate of 26.1 per cent in 2002-03. The provisional figure for 2002-03 is significantly higher than the 24.2 per cent reported earlier.

"The reduction in the government's fiscal deficit has accounted for part of the increase, with the balance coming from higher savings in the private corporate and household sectors," said Saumitra Chaudhuri, economic analyst, Icra.

The public sector reported a significant improvement in performance, with dissavings falling from Rs 26,652 crore to Rs 9,429 crore in 2003-04. Its share in gross domestic savings went up from a -4.1 per cent to -1.2 per cent. The investment rate in the economy also rose from 24.8 per cent in 2002-03 to 26.3 per cent in 2003-04.

"Part of this increase could have been accounted for by the housing boom," said Subir Gokarn, chief economist, Crisil.

"There has been anecdotal evidence of a change in the direction of capital formation in the economy for some time now. Investment rates have been going up across construction and machinery and equipment," Chaudhuri added.

Gross fixed capital formation (GFCF) at constant prices was Rs 388,295 crore in 2003-04, up 9.7 per cent from Rs 3,54,086 crore in 2002-03.

The higher economic growth reported for 2003-04 was based on higher growth in the quick estimates for the agriculture, mining and construction sectors than was reported in the revised estimates and despite lower growth in the manufacturing, electricity, gas and water supply sectors.

"The higher growth has been partly attained by lowering of the previous year's rates. The higher growth for 2003-04 will not affect the expected rate of 6-6.5 per cent growth," said BB Bhattacharya, Director, Institute of Economic Growth.

The figures released today show that agricultural production fell by 7 per cent in 2002-03, against previous estimates of a 5.2 per cent fall in production.

Gross domestic product (GDP) at factor cost at constant (1993-94) prices was estimated at Rs 14,30,548 crore in 2002-03 against Rs 13,18,362 crore in the previous fiscal.

According to the quick estimates, per capita income in real terms was up 7.1 per cent in 2003-04 to Rs 11,799 from Rs 11,013 in 2002-03.

The per capita income at current prices was estimated at Rs 20,989 in 2003-04 against Rs 19,040 for the previous year, a growth of 10.2 per cent.

The expenditure at constant prices on all items except sugar, gur, coffee, tea and cocoa and clothing increased in 2003-04 compared to the previous fiscal.