India's GDP beats expectation; grows by 9.3%

A healthy growth in manufacturing and services coupled with a rebound in the farm sector propelled the Indian economy to 8.4 per cent growth in 2005-06, as compared to 7.5 per cent in the previous fiscal.

The 8.4 per cent growth is higher than earlier estimates of 8.1 per cent GDP growth during 2005-06.

As per the revised estimates by the Central Statistical Organisation (CSO), the GDP grew by 8.5 per cent in the first quarter of FY'06, 8.4 per cent in the second quarter, 7.5 per cent in the third and 9.3 per cent in the fourth quarter.

Agriculture sector growth bounced back to 3.9 per cent from 0.7 per cent in 2004-05, bringing the government closer to achieving its target of four per cent growth.

Strong performance

Manufacturing and services sector continued to post strong performance during the year, which was blotted only by a decline in mining and social services.

"Agriculture sector has shown improvement. The revision in farm growth is not unusual," said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The economy is on the path to sustained high-growth trajectory, he said, adding there were no signs of overheating and all macro indicators were in reasonably okay shape.

The manufacturing sector grew by nine per cent from 8.1 per cent and construction by 12.1 per cent as against 12.5 per cent in 2004-05.

Electricity, gas and water supply improved marginally to post 5.3 per cent growth in the financial year ending March 31, 2006 as against 4.3 per cent in the previous fiscal.

Ahluwalia said the power sector remained an area of concern. Rising oil prices could also affect the economy, he said.

"Further, high-growth cannot be sustained on the back of services alone," he said, adding manufacturing would have to be given greater thrust.

National Income

In rupee terms, GDP at factor cost at constant prices stood at Rs 25,95,339 crore.

National income is estimated at Rs 23,25,282 crore during 2005-06, a rise of 8.6 per cent over that of 2004-05. Per capita income in real terms during 2005-06 rose 6.9 per cent to Rs 21,005.

Farm sector during the fourth quarter in 2005-06 posted a robust growth of 5.5 per cent as against a dismal 1.5 per cent in the same period previous fiscal.

This was one of the main reasons for the GDP growth of 9.3 per cent growth in fourth quarter last fiscal compared to 8.6 per cent in the year-ago period.

Besides farm sector, electricity, gas and water supply improved by 6.1 per cent, compared to 1.4 per cent a year ago.

Manufacturing grew by 8.9 per cent in the fourth quarter; construction by 12 per cent; trade, hotels and transport by 12.9 per cent; financial services, insurance, real estate by 10.5 per cent, mining by 3.0 per cent and social and community services by 7.6 per cent. (PTI)

India will be 'youngest' nation by '10: Study

India is set to be the world's 'youngest' nation by 2010 and will be the only large country to have favourable demographics - the only large country where the earning population is more than those dependent.

While India's median age by 2015 will be 27 from the current 24, that of China will reach 37 from 32. Favourable demographics, along with structural reforms and globalisation will drive the country to a sustained +8 per cent economic growth, according to a JM Morgan Stanley study.

The second edition of the 'India and China: New Tigers of Asia' study, says that India can maintain the high-growth phase longer than East Asia as its age-dependency ratio will continue to decline till 2035 - that is, the share of working-age population will continue to rise.

"The economic impact of India's demographic trends should improve further as the age-dependency ratio falls to 55 per cent by 2010 and to 52 per cent by 2015 from an estimated 60 per cent at present," Chetan Ahya, executive director, JM Morgan Stanley Securities, said.

The favourable demographics would also push India's aggregate savings to over 33-35 per cent of GDP over the next five years, from the past three years' average of 28.6 per cent, Ahya said.

"This increase in savings and, correspondingly, the investment-to-GDP ratio to above 35 per cent should ensure a shift in India's growth to a sustained rate of +8 per cent," Ahya said. On the other hand, over the next 10 years China's growth rate would moderate from a high base.