The Hindu Business Line : Services, manufacturing drive 9.2% GDP growth

Chennai April 23 The GDP growth in 2006-07 was 9.2 per cent, driven by growth in manufacturing and services sector, according to the statement from the Reserve Bank of India on macroeconomic and monetary developments in 2006-07, put out a day ahead of its annual credit policy announcement.

In the statement, the RBI said that agricultural growth slowed down to 2.7 per cent from six per cent a year earlier.

In the section on the price situation, the RBI, after reviewing the steps taken last fiscal to control inflation, reiterated: "The conduct of monetary policy would continue to demonstrate that inflation beyond the tolerance level was unacceptable and the resolve to ensure price stability was always backed by timely and appropriate policy responses."

The last few inflation readings have been much above the RBI's target of 5-5.5 per cent for the year.

Inflation was at four per cent a year back.

In a bid to control inflation the RBI had hiked its repo rate five times last fiscal, from 6.50 per cent to 7.75 per cent, and the cash-reserve ratio by 1.5 percentage points to 6.5 per cent.

According to the statement, bank credit grew 28 per cent last fiscal compared to 31.8 per cent in the previous fiscal, while deposits grew 23 per cent (18 per cent).

According to data available up to December, 35 per cent of the incremental credit went to industry, 29 per cent to personal loans, 12 per cent to agriculture and about four per cent to commercial real estate.

Broad money or M3 grew by 20.8 per cent from 17 per cent at the end of March 2006.

During the last fiscal, the rupee appreciated 2.3 per cent against the dollar and 2.7 per cent against the yen, but depreciated nine per cent against the pound and 6.8 per cent against the euro, the statement said.

Capital inflows were substantially higher, driven by higher foreign direct investments (FDI) and external commercial borrowings.

According to data provided in the statement, FDI stood at $16.4 billion during in the April-January period of 2006-07 compared to $5.8 billion in 2005-06.

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