The Hindu Business Line : GDP growth for 2003-04 revised upwards to 8.5 pc

THE Government today revised upwards the country's gross domestic product (GDP) growth rate for 2003-04, with the latest `quick estimate' putting the figure at 8.5 per cent, as against the earlier `revised estimate' of 8.2 per cent released on June 30 last year.

The upward revision has been on account of the farm sector and services, which are now estimated to have registered growth rates of 9.6 per cent and 9.1 per cent in 2003-04 (against the earlier estimates of 9.1 per cent and 8.7 per cent, respectively). On the other hand, the growth rate for industry has been marginally brought down from 6.7 per cent to 6.6 per cent.

The 8.5 per cent overall economic growth recorded in 2003-04 marks the highest ever since the 9 per cent and 10.5 per cent levels of 1975-76 and 1988-89, respectively. In all these occasions, the key driver behind high growth rates has been the farm sector declines. 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 year 2003-04 has, however, been not just about a strong rebound in agriculture, which has grown by 9.6 per cent after suffering a decline of 7 per cent in 2002-03. But not all of the 8.5 per cent overall GDP growth recorded for 2003-04 can be attributed to the recovery-from-drought factor. The latest quick estimates show that the industry and services sectors have also performed reasonably well.

Another way to make the same point is by working out what the overall real GDP growth for 2003-04 had been, assuming the farm sector had not grown at all. The figure in this case, too, comes to a respectable 6.4 per cent. Simply put, there has been a genuine underlying growth momentum in the economy since last year, which appears to have gained further consolidation this year.

The Central Statistical Organisation (CSO) has estimated the GDP of the country — the sum total of all incomes generated from within its domestic territory, valued at current market prices — at Rs 27,60,025 crore during 2003-04, which is about $632 billion at current exchange rates.

The GDP at factor cost — which nets out all indirect taxes and explicit subsidies and, therefore, represents actual incomes `earned' within India — was estimated at Rs 25,19,785 crore. The Gross National Product (GNP) — the aggregate income accruing to all Indian nationals from both domestic as well as foreign territory — at factor cost amounted to Rs 25,05,707 crore.

The country's `national income' or Net National Product (NDP) — GNP at factor cost minus depreciation of assets — stood at Rs 22,52,070 crore during 2003-04. This figure, for an estimated population of 107.3 crore, translated into an annual per capita income (technically called per capita NNP at factor cost) of Rs 20,989. That's what an average person in India would have earned last fiscal.

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