The higher growth came largely on the back of a higher 6% growth in farm output. According to the earlier estimate, growth in agriculture was estimated to be 3.9%. Manufacturing, too, has shown a marginal improvement and its growth rate has been revised to 9.1% compared with the earlier estimate of 9%.

Apart from agriculture and manufacturing, growth in sectors like forestry and fishing, insurance and construction, also nudged up growth in the last fiscal.

Commenting on the upward revision, finance minister P Chidambaram said, “The UPA government’s policy has boosted savings and investment and perhaps also pushed the industry to be more productive and efficient. The revised figures augur well for 2006-07. I must caution about its impact on growth figures this year as the base figures have been revised.”

Both savings and investment were above 30% of GDP in 2005-06. Gross capital formation at current prices constituted 33.8% of GDP, as against 31.5% in 2004-05, while gross domestic savings accounted for 32.4% of GDP as against 31.1%.

Significantly, capital formation as a percentage of GDP by the private corporate sector was higher than that of the household sector. In the last five years, it has more than doubled to 12.9% compared with the household sector, which has dropped marginally to 10.7% of GDP.