Macroeconomic Scene: Central Bank Spells Out The Hard Facts

Mumbai, Aug 30: | Updated: Aug 31 2002, 05:30am hrs
Indian economy showed strong resilience amidst the world-wide recessionary pressure with worsening economic activities. Backed by robust agricultural production, India saw a 5.4 per cent growth in gross domestic product (GDP) in 2001-02 against a deceleration to four per cent in 2000-01.

But, industrial production suffered a deceleration especially due to the slowdown in manufacturing sector.

Capital goods and crude petroleum production declined. Real GDP originating in the services sector rose by 6.2 per cent in 2001-02, up from five per cent in 2000-01.

This reflects an improved performance of financial services, particularly in financing, insurance, real estate and business services. The services sector accounted for over 54 per cent of GDP and contributed 62.2 per cent of the growth of real GDP. The share of agriculture and allied activities in GDP was 24.3 per cent with the share of industry in GDP also declining. The rate of gross domestic capital formation at current prices slowed down to 24 per cent, down from 24.3 per cent in 1999-2000. This was primarily due to the dip in private corporate investment which declined to 5.9 per cent (6.5 per cent). Public sector investment rate remained stable at 7.1 per cent.

The rate of gross domestic savings was slightly higher at 23.4 per cent (23.2 per cent). All the sectors registered improvement in savings rate except the public sector, which increased its dissaving rate to 1.7 per cent (0.9 per cent).

Savings rate by the household sector grew by 0.6 per cent.

The RBI estimates, based on latest available data, shows the rate of household financial savings at 10.9 per cent in 2001-02 (10.8 per cent).

The overall savings-investment gap narrowed to 0.6 per cent of GDP in 2000-01, down from 1.1 per cent in 1999-2000.