The Hindu Business Line : Economy to grow by 8.1 pc in '03-04

THE economy is expected to grow 8.1 per cent during the current fiscal, led by a strong agricultural rebound and sustained buoyancy in both the industry and services sectors.

According to the `advance estimates' of national income for 2003-04, released by the Central Statistical Organisation (CSO) here on Monday, the growth in real gross domestic product (GDP) this year, at 8.1 per cent, would be twice the 4 per cent-level recorded for 2002-03 and also higher than the 5.8 per cent figure for the previous fiscal.

Only on three occasions previously has the GDP growth surpassed the 8 per cent mark — 8.1 per cent in 1967-68, 9 per cent in 1975-76 and 10.5 per cent in 1988-89. In each of these occasions, the key driver was the farm sector emerging from drought-induced declines.

In 1967-68, the agriculture sector grew by 14.9 per cent, having contracted by 1.4 per cent and 11 per cent during the preceding two years. In 1975-76, the 12.9 per cent agricultural growth followed a 1.5 per cent decline in the previous year, just as the 15.5 per cent growth in 1988-89 came after the - 1.3 per cent and - 0.6 per cent figures for the preceding two years. The pattern is somewhat similar in the current fiscal as well, with the farm sector slated to register a growth rate of 9.1 per cent, after having suffered a de-growth of 5.2 per cent in 2002-03.

But what is significant to note is that the jump in GDP growth from 4 per cent to 8.1 per cent in 2003-04 has not been simply about a good monsoon-triggered agricultural recovery following last year's severe drought.

The strong farm sector rebound has come alongside a buoyant industry and services sector. From the accompanying table, it can be seen that industry as a whole is expected to grow by 6.5 per cent during 2003-04, which is more than the 6.4 per cent and 3.4 per cent levels for the preceding two years. Similarly, the 8.4 per cent growth rate for services would be higher than the 7.1 per cent and 6.8 per cent figures for 2002-03 and 2001-02, respectively.