Revised GDP may hit growth target

The revised 2005-06 GDP figures have led to optimism that the agriculture sector will continue contributing positively to GDP growth this fiscal year too.

Still, some experts feel that the task to achieve 9 per cent or more growth this year will become even more formidable.

Subir Gokarn, chief economist, CRISIL said: "The year-on-year GDP growth will come down, as the previous year base figured has now been upped."

He added the significant revision showed that the system was inadequate to capture some significant data. "Some process needs to be put in place, or else everybody will start questioning the accuracy of our data".

Commenting on the revised data, Pranab Sen, principal adviser, Planning Commission, said: "The revision may not have a large impact on the GDP of the current fiscal year as only the agriculture output, which contributed to the scaling up of the previous year's GDP, may have to be revised."

Sen attributed the revisions to the delay in receiving agricultural data. "The problem is only with the agriculture data which is collected and compiled by the state governments that comes late to the central government."

Both savings and investment rates were above 30 per cent of GDP in 2005-06. The Gross Capital Formation at current prices constituted 32.2 per cent of the GDP in 2005-06 as against 30.2 per cent in 2004-05, while the Gross Domestic Saving (GDS) accounted for 32.4 per cent of GDP as against 31.1 per cent.

While savings by households and the private sector rose, the same by the public sector declined.

The optimism about a positive contribution from the agriculture sector to the GDP growth this year is based on several factors, including encouraging production outlook for the current rabi, higher consumption of fertilisers and near normal rainfall in the past monsoon season.

Though the agriculture ministry's first advance estimates for the production in last kharif projected shortfall in most crops, except sugarcane, but these numbers are expected to be revised upwards, taking into account the latest and relatively more reliable information from the states, according to the agriculture ministry sources.

In the current rabi, the area sown under all crops, barring oilseeds, is reckoned to have gone up. Besides, the weather conditions have so far been favourable for healthy crop growth.