Trade Articles

Indian economy has reached to a landmark of 9% GDP in 2007-08. Robust agricultural sector has pushed the GDP to 9% even when the manufacturing sector fails to live up the expectations of higher growth. The economy has boomed at 9 per cent in 2007-08, more than 8.7% what was estimated. The time period from 2003-04 to 2007-08 has seen a 5 progressive years in the India's economy history with a 8.8% annual average GDP growth rate. The 2007-08 9% GDP has put India into the group of one of the fastest growing major economy after China. It is the 3rd year in a row, in which nation's GDP has touched the mark of 9% or above.

The pace of growth has been recorded fast as compare to what was expected by market. The government had earlier estimated annual growth of 8.7 percent for the whole of 2007-08. The finance minister Mr. P Chidambaram described the 9% GDP growth for the year 2007-08 as 'satisfactory'. The government exuded confidence that the economy will achieve the same or more GDP growth in 2008 year also. The industrial market is considered it as a good sign from trading point of view, as year 2007 witnessed high turbulence in stock exchange and financial markets.

Going by the estimates released by the Central Statistical Organization, real GDP at factor cost was registered 9% in 2007-08 (9.6% in 2006-07). The main reason of robust 9 percent GDP growth rate can be credited to the higher investment rates. The gross fixed capital formation ratio to GDP which was 23.80 % in 2002-03, had shoot up to 24.94% in 2003-04, 28.41% in 2004-05, 30.98 % in 2005-06, 32.48 % in 2006-07 and 33.91 % in 2007-08.

Agriculture Sector
The higher GDP growth rate has been ascribed to the good performance of the agricultural sector. It was increased to 4.5% as compared to projected 2.6%. This is seen as a result of bumper production of wheat, rice, maize, soya bean, cotton, pulses, which has reached to its maxim. The government says, the buoyancy in agricultural sector is account to the revision made in the estimated agriculture crops production by the Department of Agriculture and Cooperation.

Service Sector
Service sector emerged as one of the main driving force in country's high GDP. It grew by 10.8 per cent in comparison of 11.1 percent of 2006-07. It was increased by 12 per cent in trade, hotels, transport and communication sectors, while it was 11.8 % in the finance, insurance, business services and real estate. Government has recorded 7.3 % rise of GDP in social and personal services, community in 2007-08.

Industry Sector
The industry has shown some signs of worries as its growth has been slowdown by more than 2% then what it was in 2006-07. In 2006-07 it was 11% but in 2007-08 it came down to 8.5%. All the expectations about the manufacturing sector and its rising share in economy pie now requires to be taken with some pinch of salt. As fallout has been seen in the manufacturing sector, where it dropped to 8.8% from 12% of 2006-07. Construction sector growth was 9.8 % vis-a-vis to 12% of 2006-07. The growth rate in electricity, gas and water supply shown a tad of 6.3 % from that of 6% in 2006-07.

Snapshot

• Agriculture sector grew by 4.5% in comparison of 2.6% projection.
• Transport and communication, trade and hotels grew by 12% with a projected 12.1% growth.
• Electricity and gas supply growth was 6.3% with a projection of 7.8%.
• Construction sector growth was registered at 9.8% with a 9.6% projection.
• Insurance, real estate recorded a marginally higher growth by 11.8% as compared to the earlier estimates of 11.7%.