Highlights of the 'Economic Outlook 2008-09'
Economy to grow at 7.7 per cent during 2008/09 as against 9% in 2007-08
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Agriculture 2.0 per cent (4.5% in 2007-08)
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Industry 7.5 per cent (8.5% in 2007-08) |
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Services 9.6 per cent (10.8% in 2007-08) |
A number of factors inimical to growth have intensified in 2008
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Sharp elevation in global commodity inflation, especially food and oil
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Tightening in credit and equity markets following sub-prime crisis in the U.S. |
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Global slowdown in growth. |
Impact of adverse global environment on India
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Lower growth
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Widen the current account |
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Pressure the fiscal system through widening subsidy bills. |
Economy continues to be supply constrained, especially in
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Physical and social infrastructure
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Electricity, water, road/rail transportation, urban/rural infrastructure and agriculture. |
Robust employment growth between 1999/00 & 2004/05
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2.89% CAGR by UPSS method and 2.6% by CDS method
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Highest growth rates in industry and services with wide interstate variations |
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GDP and employment growth rates moved in tandem. |
Investment rate similar to 2007/08, but savings projected to decline
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Investment rate projected at 37.5% and savings at 34.5% of GDP
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Lower savings through worsening government finances and erosion in corporate profit. |
Capital inflows of $ 70.9 bn ($ 108.03 bn in 2007-08)
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Net reserves accretion of$ 29.4 billion ($ 92.2 billion in 2007-08).
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Surge in Inflation
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Mostly on account of rising global commodity prices
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Co-coordinated policy action can bring inflation down to 8-9% by March 2009 |
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Tight monetary stance to continue for some. |
Serious fiscal risks
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Fiscal deficit targets to overreach while revenue deficits would persist
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Fiscal deficit improved through higher tax revenues and lower interest payments |
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Serious fiscal risks arising from growing off-budget liabilities estimated at 5% of GDP. |
| Past Performance and Projections for 2008/09 |
Annual
Rates |
2003/
04 |
2004/
05 |
2005/
06 |
2006/
07
Rev |
2007/
08
QE |
2008/
09
Projected |
| Percentage change over previous year |
| 1. |
Agriculture &
allied activities |
|
10.0 |
-0.2 |
5.9 |
3.8 |
4.5 |
2.0 |
|
3.1 |
8.2 |
4.9 |
5.7 |
4.7 |
7.5 |
|
6.6 |
8.7 |
9.0 |
12.0 |
8.8 |
7.2 |
| 4. |
Elect. Gas &
Water Suply
|
|
4.8 |
7.9 |
4.7 |
6.0 |
6.3 |
6.5 |
|
12.0 |
16.1 |
16.5 |
12.0 |
9.8 |
8.5 |
| 6. |
Trade, Hotels,
Transport, Storage
& Communication |
|
12.1 |
10.9 |
11.5 |
11.8 |
12.0 |
9.8 |
| 7. |
Finance,
Insurance, real
estate & business
services
|
|
5.6 |
8.7 |
11.4 |
13.9 |
11.8 |
10.0 |
| 8. |
Community &
personal services
|
|
5.4 |
6.8 |
7.2 |
6.9 |
7.3 |
8.4 |
|
8.5 |
7.5 |
9.4 |
9.6 |
9.0 |
7.7 |
| 10. |
Industry
(2 + 3 + 4 + 5)
|
|
7.4 |
10.3 |
10.1 |
11.0 |
8.5 |
7.5 |
|
8.5 |
9.2 |
10.3 |
11.1 |
10.8 |
9.6 |
| 12. |
Non-agriculture
(9-1)
|
|
8.1 |
9.6 |
10.3 |
11.0 |
10.0 |
8.9 |
| 13. |
GDP (factor cost,
const. prices)
per capita
|
|
6.7 |
5.8 |
7.8 |
8.1 |
7.5 |
6.2 |
|
| |
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