We are disappointed but not despondent: Chidambaram.
Strong indications of a slowdown in 2007-8 emerged from the government’s advance estimates today that put gross domestic product (GDP) growth at 8.7 per cent, raising concern over whether the Indian economy could sustain growth at over 9 per cent in 2008-09.
The estimate, the first in a sequence of five national income estimates put out by the Central Statistical Organisation (CSO) over two years after the first data are released, suggests that high interest rates have impacted manufacturing and construction, dampening overall growth.However, the CSO’s growth estimate is still higher than the Reserve Bank of India’s forecast of 8.5 per cent GDP growth for 2007-08 but lower than Finance Minister P Chidambaram’s prediction of 9 per cent. The Planning Commission has targeted an average GDP growth rate of 9 per cent during the 11th Plan (2007-12).
Describing the GDP numbers as lower than expected, the finance minister nevertheless said he is "disappointed but not despondent".
I am reasonably confident that the figures may be revised and economy will grow at close to 9 per cent," he added.
Agriculture is expected to grow at 2.6 per cent in 2007-08, while the industry and services sectors, which together account for over three-quarters of GDP, are projected to grow at 8.6 and 10.6 per cent, respectively.
"The pace of economic growth is in line with growth in potential output. We have estimated that the economy’s potential growth rate is between 8 and 8.5 per cent and it will continue to grow in that range", said Joshua Felman, the International Monetary Fund’s senior resident representative in India.
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