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CSO's revised GDP estimate presents better picture

S.D. Naik

THE Central Statistical Organisation (CSO) has revised upwards its estimate of the country's GDP growth for 1999-2000 to 6.4 per cent from its earlier forecast of 5.9 per cent. Thus, the much-talked-about slowdown of the economy during the year has turne d out to be only modest from the GDP growth of 6.8 per cent in 1998-99.

According to the `revised estimates', the GDP at factor cost at constant 1993-94 prices has been put at Rs. 11,51,355 crores, compared to Rs. 11,45,436 crores as per the `advance estimates' released earlier on January 28. The corresponding per capita inc ome is estimated to have reached Rs. 10,207. The GDP at factor cost at current prices for 1999-2000 has been assessed at Rs. 17,72,183 crores as compared to Rs. 16,12,383 crores in 1998-99, thus registering a growth of 9.9 per cent.

The corresponding per capita income at current prices works out to Rs. 15,887 registering a growth of 4.8 per cent in 1999-2000 over the previous year. All the three major sectors have contributed to the over all increase of 0.5 per cent in GDP at consta nt 1993-94 prices in the revised estimate.

The growth rate of industry is now being assessed at 7.8 per cent (against the earlier 6.9 per cent); agricultural growth is estimated at 1.3 per cent (0.8 per cent) while the services sector has logged a growth of 8.6 per cent (8.3 per cent).

But for the significant slowdown in the farm sector from a robust 7.2 per cent in 1998-99 to 1.3 per cent, the overall GDP growth would have been somewhere around seven per cent. When the final figures come, the actual growth rate of farm sector may turn out to be somewhat higher than 1.3 per cent given in the revised estimate.

For according to the latest reassessment, India's foodgrains production during 1999-2000 is placed at 205.91 million tonnes against the earlier estimate of 201.56 million tonnes and the previous year's production of 203.04 million tonnes.

The real heartening feature of the revised estimate, however, is the strong recovery in industrial growth from 4.0 per cent to 7.8 per cent which has been largely driven by the manufacturing segment which accounts for about 80 per cent of the total indus trial output.

The manufacturing segment is now estimated to have grown by 8.5 per cent compared to the January forecast of seven per cent. It had grown by a meagre 3.6 per cent in 1998-99. The manufacturing segment grew by 10.5 per cent in the last quarter of 1999-200 0 and gained further momentum in April, the first month of the current fiscal when it logged a growth of 14 per cent pushing up the overall industrial growth for the month to 12.2 per cent.

Thus, it is evident that after three years of slowdown, the Indian industry has staged a remarkable turnaround in 1999-2000 and promises to do still better during the current fiscal. This strong recovery has been aided, in no small measure, by a signific ant turnaround in the country's export growth.

Exports registered a growth of 11.58 per cent in dollar terms in 1999-2000 after a prolonged slowdown lasting three years; the growth turning negative (-3.9 per cent) in 1998-99. The export growth has surged by 30 per cent during April and May, the first two months of the current fiscal.

The services sector which has emerged as the fastest growing sector in recent years, has once again contributed the most to the overall GDP growth in 1999-2000. As per the revised estimates, it has registered a growth of 8.6 per cent during the year. If one disaggregates the 6.4 per cent increase in the GDP during 1999-2000, it is seen that around 62 per cent of this growth has come from the services while industry and agriculture have contributed 32.7 per cent and 5.3 per cent respectively.

On the balance of payments (BoP) front, India has improved its position in spite of a much higher oil import bill following the surge in international oil prices. According to the latest figures released by the Reserve Bank of India, India's overall bala nce of payment surplus in 1999-2000 rose to $6.4 billions from $4.2 billions in the previous year. The current account deficit was higher only marginally at $4.2 billions compared to $4.1 billions in 1998-99.

The country's BoP surplus during 1999-2000 was boosted by a heavy inflow of foreign investment during the last quarter of the year and a strong growth in software exports. Apparently, the reform process seems to have helped in attracting foreign investme nts and enabled the economy to maintain satisfactory growth rates in spite of some slowdown in gross domestic saving and investment rates.