Survey sees scope for gradual rollback of stimulus measures.
A positive outlook has overtaken the pessimism of last year, with the government now expecting a double-digit growth in Gross Domestic Product (GDP) within the next four years. The Economic Survey 2009-10 sees India growing the fastest by 2013-14, provided it is able to overcome infrastructure and bureaucratic constraints.
It has predicted 8.5 per cent growth for 2010-11 and 9 per cent for 2011-12. With this confidence, the Survey also sees a “scope for a gradual rollback” of stimulus measures. “The broad-based nature of the recovery creates scope for a gradual rollback, in due course, of some of the measures undertaken over the last 15-18 months, as part of the policy response to the global slowdown, so as to put the economy back on to the growth path of 9 per cent per annum,” it says.
The optimism for next year comes from a revival in exports, manufacturing, infrastructure and investment and private consumption demand along with a favourable capital market.
The Survey notes with concern that for the emerging economies, which are already on the path to recovery, there are challenges emanating from increased capital flows with ramifications for monetary growth, inflation and exchange rate uncertainty, along with policy implications for the capital account.
| ROBUST GDP GROWTH Rs crore | ||
| GDP of factor cost, 2004-05 prices | 2008-09 (QE) | 2009-10 (AE) |
| Agriculture, forestry & fishing | 6,50,461 (1.6) | 6,49,370 (-0.2) |
| Manufacturing | 6,49,635 (3.2) | 7,07,512 (8.9) |
| Construction | 3,32,782 (5.9) | 3,54,514 (6.5) |
| Trade, Hotels, Transport and communication | 10,84,764 (7.6) | 11,74,320 (8.3) |
| Financing, insurance, real estate & business services | 7,01,338 (10.1) | 7,70,443 (9.9) |
| Community, social & personal services, | 5,55,382 (13.9) | 6,00,980 (8.2) |
| GDP at factor cost | 41,54,973 (6.7) | 44,53,064 (7.2) |
| (Figures in brackets represent annual growth) | ||
It says the real turnaround in the domestic economy came in the second quarter of 2009-10, when the economy grew by 7.9 per cent. The recovery came despite a 0.2 per cent decline in agricultural output since manufacturing growth more than doubled to 8.9 per cent in 2009-10 from 3.2 per cent in 2008-09. Besides, there has been a recovery in the growth rate of gross fixed capital formation, which had declined significantly in 2008-09.