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8.1 per cent GDP growth projected

Wednesday 8 February 2006

Special Correspondent

A heady mixture: Chidambaram

Good monsoon will help to raise farm output Flat growth likely in mining sector Per capita income to go up to Rs. 20,813

NEW DELHI: The Centre has projected a growth rate of 8.1 per cent for the current fiscal, much beyond the expectations of the Finance Ministry and the Reserve Bank of India. The gross domestic product (GDP) grew at 7.5 per cent in 2004-05.

According to the estimates by the Central Statistical Organisation (CSO) released here on Tuesday, the manufacturing sector with a robust growth of 9.4 per cent and the booming services sector with a growth of eight per cent would drive the GDP growth.

Soaring Sensex

Finance Minister P. Chidambaram said the crossing of the 10,000-point mark by Sensex and the projected 8.1 per cent GDP growth were a "heady mixture." Noting that the "sound monetary and fiscal policy will bring us growth," he said, "Sensex reflects the business confidence and strong fundamentals of the economy."

Also pushing the GDP growth would be the good monsoon, which is expected to raise agricultural production by 2.3 per cent compared to a lacklustre 0.7 per cent in the previous fiscal. In effect, the country’s GDP at factor cost and constant (1999-2000) prices, pegged at Rs. 23,93,671 crore in 2004-05, is slated to be valued 8.1 per cent higher at Rs. 25,86,587 crore in the current fiscal.

In keeping with the higher growth, the per capita income or the average income of an Indian is estimated to go up by 5.9 per cent to Rs. 20,813 from Rs. 19,649 a year ago.

Dim growth in electricity

The CSO data revealed that the overall economic growth could have been higher but for the mining sector, which is likely to see a flat growth of 0.6 per cent compared to the 5.1 per cent clocked a year ago.

Likewise, electricity is slated to achieve a lower growth of 4.9 per cent as against 6.6 per cent last year.

Thanks to the real estate boom, construction activity is expected to sustain a growth of 12.1 per cent, marginally lower than the 12.5 per cent in 2004-05.

The services sector will make up for the shortfall. Trade, hotel, transport and communication are slated to expand by 11.1 per cent against 10.6 per cent in 2004-05.

In the banking sector, financing and insurance are expected to witness a growth of 9.5 per cent compared to 9.2 per cent a year ago as bank deposits are seen growing by 18.9 per cent. Credit offtake is up by 29.7 per cent.

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