Recovery will enable govt to continue with fiscal consolidation.
The finance ministry expects the Indian economy to break a three-year hiatus caused by the global financial crisis by returning to the nine per cent growth path from the next financial year on a sustained basis. At the same time, it maintains that ongoing political crises in West Asia, an uncertain global recovery and any abnormal weather condition may spoil the exuberance.
An economic recovery will also enable the government to continue with its fiscal consolidation process, as fiscal deficit stands revised at 4.8 per cent of gross domestic product (GDP) for the current financial year against the Budget estimates of 5.5 per cent, says the Economic Survey for 2010-11.
This may enable the government to further prune fiscal deficit below the target of 4.8 per cent in the next financial year, set by the Thirteenth Finance Commission.
The survey pegged the 9 per cent growth with a rider that global developments and adverse weather conditions could drag it down by 0.25 percentage points, while positive factors could push it up further by the same margin.
The finance ministry expects the Indian economy to do better in the years to come, as the rates of investments and savings will rise after the government further pulls out of stimulus gradually. However, it noted that skilled training of the workforce and the country’s innovative capacity was of much greater importance to Indian growth at this point of time than investment and savings rates.
| ROBUST GDP GROWTH Rs crore | ||
| (GDP at factor cost, 2004-05 prices) | 2008-09 (QE) | 2009-10 (AE) |
| Agriculture, forestry & fishing | 7,51,362 (0.1) | 7,60,974 (1.3) |
| Manufacturing, construction, etc | 10,71,676 (4.7) | 11,58,000 (8.1) |
| Trade, hotels, transport and communication | 10,87,575 (7.5) | 11,93,282 (9.7) |
| Financing, insurance, real estate & business services | 7,06,712 (12.5) | 771,763 (9.2) |
| Community, social & personal services | 5,45,184 (12.7) | 6,09,724 (11.8) |
| GDP at factor cost | 41,62,509 (6.8) | 44,93,743 (8.0) |
| (Figures in brackets represent annual growth) | ||
But, Shanto Ghosh, principal economist with Deloitte India, wanted that the survey should have dealt with the issue of skill development more adequately.
The survey also did not indicate when the barrier for sustained 10 per cent growth would be breached, as Finance Minister Pranab Mukherjee wanted.
It should also be noted that the ministry had revised its projections for economic growth to 8.75 per cent for the current financial year from earlier 8.5 per cent. But according to advance estimates, the growth is likely to be 8.6 per cent.
The survey said the projections were always subject to error and hence it gave a range for the projections.
