India?s economic growth continued to be robust in 2006-07, largely backed by the sustained momentum in services and manufacturing sectors, a report by the Reserve Bank of India (RBI) on the first-quarter macroeconomic and monetary developments said on Monday.
The latest estimates by the Central Statistical Organisation (CSO), in May this year, has put the GDP growth at 9.4% from the earlier January estimate of 9.2%.
The upward revision was mainly due to manufacturing and construction sectors, of which growth estimates have been revised up at 12.3% from 11.3% and 10.7% from 9.4%, respectively. The estimates were also revised downward in case of financing, insurance, real estate and business services to 10.6% from 11.1%.
On the agricultural situation, the rainfall during June-September 2007 is likely to be 93% of the long-period average. The monsoon covered the entire country by July 4 and the cumulative rainfall during the current season (up to July 25) was 4% above normal compared with the 14% below normal during the corresponding period of the previous year.
The total kharif area sown was 1.7% higher than the year-ago period. Industrial production in April-May 2007 saw a year-on-year expansion of 11.7%. Manufacturing sector remained the key driver of industrial activity with 12.7% growth. Infrastructure sector grew 8.1% during April-May 2007 against 7.2% in the corresponding period last year.
This was mainly due to improvement in electricity and petroleum refinery products. Growth deceleration in steel and cement sectors were observed and largely attributed to the base effect as well as capacity constraints.
Services sector continued to record double-digit growth during 2006-07, the report said. The robust growth rate was the third year in succession. Accelerated growth was seen in trade, hotels, restaurants, transport, storage, and communication. This more than offset the deceleration in the construction sector.
Services sector contributed 71.5% to the overall GDP of 9.4% for 2006-07. The June 2007, Industrial Outlook Survey of RBI, revealed a decline in business expectations index (April-June 2007) by 5.8% over the previous quarter and for July-September 2007 by three per cent over the previous quarter.
On the fiscal situation, gross fiscal deficit, revenue and primary deficits of the central and state governments combines were budgeted to decline by 0.7-0.9 percentage points of 2007-08 GDP from the revised 2006-07 revised estimate. The combined debt to GDP ratio of both, centre and states, is budgeted to decline from 77% (31, March 2007) to 74.2% by end March 2008.
The budgeted revenue deficit and the gross fiscal deficit of the Centre at 1.55 and 3.3% of GDP, respectively, during 2007-08 would be 0.5 and 0.4 percentage points lower than the revised estimates for 2006-07.
All key deficit indicators were lower than a year ago in absolute terms. Gross fiscal deficit was also lower in April-May 2006 than the budget estimates.
Gross and net market borrowings of the Centre that include dated bonds and 364-day treasury bills up to July 26, 2007 were Rs 85,628 crore and Rs 46, 047 crore that accounted for 45.3% and 42%, respectively, of the estimated yearly target. The centre took recourse to ways and means advances for 72 days (up to July 26, 2007) as compared with 33 days during the same period of the corresponding year.
The average utilisation of WMA and overdraft by the states were Rs 694 crore in the current fiscal (up to July 20) against the Rs 258 crore in the corresponding period last year.
