India Asia's fastest-growing economy

FISCAL 2004 ENDS WITH A BANG

Overtakes China, GDP growth vaults to 10.4%.

India's gross domestic product (GDP) growth rate in the third quarter of 2003-04 is estimated at 10.4 per cent, higher than that of all other emerging economies.

While China's GDP grew 9.9 per cent during the corresponding period, Argentina's grew 9.8 per cent. The Indian economy grew just 2.2 per cent during the corresponding period of the previous fiscal.

Data released by the Central Statistical Organisation today revealed that the double-digit GDP growth during October-December 2003 came on the back of a robust 16.9 per cent growth in agriculture, forestry and fishing and 13.1 per cent growth in trade, hotels, transport and communications over the corresponding period in the previous fiscal.

The manufacturing sector grew 7.4 per cent, while the financing, insurance, real estate and business services sector grew 7.7 per cent.

India's economy has grown over 8 per cent only twice in the past, 9 per cent in 1975-76 and 10.5 per cent in 1988-89. Subir Gokarn, chief economist, Crisil, said the 10.4 per cent third quarter-growth in the current fiscal was the highest published quarterly growth rate recorded by India. "The Central Statistical Organisation started giving quarterly estimates only in 1997," he added.  

For the full fiscal, the finance ministry is expecting the GDP growth rate to exceed the 8.1 per cent advance estimates of the Central Statistical Organisation.

"If the third quarter figures are any indication, I will not be surprised if the GDP growth for 2003-04 exceeds 8.1 per cent," said Ashok K Lahiri, chief economic adviser in the finance ministry.

The Indian economy grew 8.2 per cent during April-December 2003, compared with 4.1 per cent in the first nine months of the previous fiscal. While in the first quarter of this fiscal the GDP grew 5.7 per cent, in the July-September quarter it grew 8.4 per cent.

According to Lahiri, double-digit GDP growth for the full fiscal is possible. "Japan recorded double-digit growth for two decades. Some East Asian countries, too, have posted similar growth," he said, adding that India would not be creating a world record if it posted over 10 per cent growth in the coming years.

Analysts pointed out that the latest data showed India's performance a shade better partly because output levels in the last fiscal, especially for the farm sector, had been revised downwards.

The GDP growth rate during October-December 2002 is now seen just 2 per cent higher than a year earlier, compared with the Central Statistical Organisation's previous estimate of 2.3 per cent. The farm sector growth during that period is now estimated to have fallen 9.8 per cent, compared with 7.6 per cent estimated earlier.

Industry chambers welcomed the third quarter GDP growth estimate.

"India is now on a high growth path and has achieved the ambition of being one of the fastest growing regions in the world," Confederation of Indian Industry (CII) President Anand Mahindra said.

The Federation of Indian Chambers of Commerce and Industry (Ficci) said in a release that the latest figures reconfirmed that the country was capable of reaching a much higher growth trajectory.

"The growth figures for the last two quarters vindicate Ficci's view that with concerted effort, a 10 per cent sustained GDP growth rate is within our reach," Ficci President Y K Modi said.

"It must be observed that the 10.4 per cent growth has been registered on a low base of 2 per cent growth in the third quarter last year," an Assocham spokesperson said.