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GDP growth touches 18-year high, inflation down
By siliconindia
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Monday, 04 June 2007, 19:30 IST
New Delhi: The economy, powered by a double-digit surge in manufacturing and services, grew 9.4 percent in 2006-07, the fastest in the last 18 years. Inflation, at the same time, fell to its lowest level in nearly 10 months in mid-May, but analysts said they do not expect any change in the policy stance of the central bank, noted business daily Mint.
The government had earlier projected the economic growth at 9.2 percent. Significantly, the countryÂs investment levels, most of which is emerging in infrastructure and capacity creation, is projected at 35.2 percent, ensuring that the current growth trajectory is likely to be sustained in the short run in spite of an ongoing credit squeeze. The savings rate is estimated at 34 percent.
With the growth rate in the last quarter of 2006-07, which averaged 9.1 percent, lower than the expected rate of 9.5 percent, there are some who now say that they think the Reserve Bank of India (RBI) will not keep tightening its money policy. The annual inflation rate, measured by the wholesale price index, has softened and dropped to 5.06 percent in the week to 19 May, the lowest since the middle of August last year.
The last time the economy grew at a higher rate was in 1988-89, at 10.2 percent. However that was an aberration as it came in the year after a severe drought had crippled the economy, this is the first time that the economy has actually witnessed a sustained phase of economic buoyancy.
The per capita income at constant prices has grown by 8.4 percent in 2006-07 to Rs22,483, over 7.4 percent in 2005-06. In terms of current prices, the the per capita income is Rs29,382, reflecting a 14.3 percent rise against the 12.1 percent growth in 2005-06.
The data also showed that the decline in agriculture has accelerated in the last three years, resulting in a drop in its share in national income from 20.2 percent in 2004-05 to 19.1 percent in 2005-06 and 18.4 percent in 2006-07.
The data released by CSO shows that some of the service sectors have already begun to slow down. Construction, in particular, slowed sharply to 10.7 percent from 14.2 percent.