India's GDP growth to exceed 6.5 % in 2003-04: CII
NEW DELHI: "The headline GDP numbers have been disappointing over the last year mainly due to the poor performance of the agricultural sector. The trough seems to be over," states the Confederation of Indian Industry (CII).
"After dipping sharply to 2.3 percent in the third quarter of 2002-03, GDP growth has picked up a bit in the last quarter to 4.9 percent. In 2003-04, CII expects the upswing in GDP growth to continue," the CII said in a report released Sunday.
Last year's agricultural performance was extremely poor due to the deficiency in monsoon rainfall over most of the important crop growing regions. This had adversely impacted India's economic growth.
This year, although the monsoon arrived a little late in most places, the all-India area weighted rainfall is so far 15 percent higher than normal.
The summer monsoon between June-September accounts for 80 percent of rainfall in the country and has a large bearing on the livelihood of around 65 percent of Indians depending on agriculture sector.
"The number of (meteorological) sub-divisions with excess or normal rainfall is not only much higher than last year but also the highest in the last six years, leading us to expect a strong performance from the agricultural sector this year," the report states.
While refusing to forecast the expected growth in agricultural performance, CII states it would definitely be good after last year's dismal performance.
Following the trend of foodgrain output typically rebounding in the year following a decline, CII states that after the 14 percent drop last year, "even if foodgrain production were to touch the average level of the past five years, this would mean a growth rate of 11 percent in 2003-04."
Foodgrain output last increased by a similar amount in 1996-97 when the growth in agricultural GDP touched a high of 9.6 percent.
"In view of the expected rebound in agricultural growth, we are revising our estimate from an earlier expectation of 2.0 to 4.0 percent to a more realistic range of 4.0 to 5.5 percent," the CII has stated.
In expectation of the high agriculture growth, CII has revised its "GDP growth forecast to a range of 6.5 to 6.8 percent."
On the industry and services front, CII is optimistic of continuing robust performance.
Despite the weak agricultural performance in 2002-03, GDP from industry and services grew rapidly at 6.0 percent and 7.1 percent respectively. The index of industrial production (IIP) grew 5.8 percent while the manufacturing sector alone grew at 6.0 percent, the CII has pointed out.
"Data for 2003-04, available only for the first two months of the year, supports an upturn so far -- the IIP grew 5.0 percent during April-May 2003 compared to 4.1 percent in the same period last year. Expectations about growth in the current year, however, vary considerably," the report states.
Not supporting the boom and bust theory for industrial growth in alternate years, CII feels there is no "reason for this upswing to end soon."
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