CSO pegs growth at 8.1 pc Estimates surpass expectations of RBI, Finance Minister

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Our Bureau

New Delhi, Feb 7

THE Central Statistical Organisation (CSO) has pegged the country's gross domestic product (GDP) growth level in 2005-06 at 8.1 per cent, as part of its advance estimates of national income, compared to 7.5 per cent in 2004-05.

This surpasses the expectations of both the RBI and the Finance Minister, Mr P. Chidambaram.

The RBI had, in its third quarter review of the monetary policy, placed its GDP growth estimates at 7.5-8 per cent, up from 7-7.5 per cent earlier.

The Finance Minister has been talking about 7 per cent plus growth for the current fiscal.

Growth movers:

The sectors that are likely to push up the growth rate are manufacturing, which the CSO expects to grow at 9.4 per cent (8.1 per cent), agriculture at 2.3 per cent (0.7 per cent), and trade, hotels, transport and communication at 11.1 per cent (10.6 per cent).

While financing, insurance, real estate, and business services are estimated to grow at 9.5 per cent (9.2 per cent), the growth in electricity, gas and water supply sector has been estimated at 5.4 per cent (4.3 per cent).

As per the CSO's advance estimates, the growth in construction segment for 2005-06 is estimated at 12.1 per cent (12.5 per cent).

However, the projection on the mining and quarrying shows a steep decline at one per cent for 2005-06 (5.8 per cent).

`Heady mix':

Enthused by the higher GDP growth projection, Mr Chidambaram told newspersons today that the growth projection of 8.1 per cent and the Sensex crossing 10,000 points was a "heady mix".

"The Sensex reflects the business confidence and strong fundamentals of the economy.

"We should continue to remain on the path of tight fiscal control and try to complete projects on time. It is this (current) monetary and fiscal policy that has given us this growth."

On the capital market, the Finance Minister has asked the SEBI to be alert on the surveillance aspect while advising retail investors to take informed decisions and invest wisely.

Aiming to grow at 10 pc:

The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, said that the country should now aim at 10 per cent growth.

"The 8.1 per cent growth projection has only vindicated what we have been saying all along, that the economy would bounce back."

According to the CSO's advance estimates of national income for 2005-06, the GDP at factor cost at constant (1999-2000) prices is estimated to touch a level of Rs 25,86,587 crore. This represents 8.1 per cent increase to the quick estimates of GDP level of Rs 23,93,671 crore for 2004-05.

Related Stories:
Economy grows at 8 pc in Q2 Manufacturing, services are main drivers; some key sectors falter
Economy logs 8.1 pc growth in Q1 Manufacturing defies predictions; services up 11.3%

(This article was published in the Business Line print edition dated February 8, 2006)
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