The Hindu Business Line : Economy set to grow at 9.2%

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New Delhi Feb 7 The Indian economy is in the midst of its best-ever growth phase in recorded history, with the gross domestic product (GDP) slated to grow by 9.2 per cent in the current fiscal.

That makes it the highest-ever growth rate since the all-time high of 10.5 per cent achieved in 1988-89. But while 1988-89 was preceded by two low-growth years on account of drought (3.8 per cent in 1987-88 and 4.3 per cent in 1986-87), the 9.2 per cent figure of 2006-07 comes on the back of a 9 per cent GDP increase in 2005-06.

With the current fiscal, there have been four successive years of 7.5-plus per cent growth of which three have registered annual increases of over 8.5 per cent. The only other time when a comparable growth story has taken place is the mid-1990s, with three years — from 1994-95 to 1996-97 — witnessing growth rates of 7.3 per cent, 7.3 per cent and 7.8 per cent.

In a statement, the Finance Minister, Mr P. Chidambaram, described the 9.2 per cent GDP growth for 2006-07 (as per the `advance estimates' of national income, released here on Wednesday by the Central Statistical Organisation) as "particularly gratifying", as it was recorded over a base year growth of 9 per cent. In other words, there is genuine underlying buoyancy, which the Chief Economic Advisor in the Finance Ministry, Dr Ashok Lahiri, claimed is "sustainable".

Industry-led boom

The present boom is largely being led by industry (more specifically, manufacturing) and services. While industry as a whole is expected to grow by 9.9 per cent this fiscal, the corresponding rates for manufacturing are even higher, at 11.3 per cent and 11.2 per cent respectively.

The area of concern though is the agriculture sector, which would expand by a mere 2.7 per cent on top of the 6 per cent for 2005-06. Agriculture's share in GDP at current prices during 2006-07 would be 18.5 per cent, down from the 23.9 per cent of 2000-01 and 32.2 per cent of 1990-91. A clear sign that the benefits of reforms are yet to percolate into the countryside, which is where a majority of Indians live.

Against this, the share of services is estimated to touch 55.1 per cent this fiscal, while it is 26.4 per cent for industry.

During 2006-07, the country's GDP at current market prices is estimated at Rs 41,00,636 crore or around $930 billion at current exchange rates.

The coming fiscal is likely to see this cross the one-trillion mark, making India the tenth one-trillion dollar economy after the US, Japan, Germany, China, the UK, France, Italy, Spain and Canada.