Financial Daily from THE HINDU group of publications
Thursday, Jun 01, 2006
Industry & Economy - Economy
Farm sector propels GDP growth to 8.4%
To sustain this growth rate, more reforms necessary, says Finance Minister
Finance Minister to meet the Prime Minister and emphasise need to address issues plaguing the mining and electricity sectors
New Delhi , May 31
The Government on Wednesday put out revised figures of economic growth during 2005-06, showing that the agriculture sector had actually grown by 3.9 per cent against the earlier estimate of 2.3 per cent. On the other hand, the manufacturing sector growth was 9 per cent and not 9.4 as was estimated in February this year when the advance estimates were released.
Thus, the overall gross domestic product (GDP) growth was 8.4 per cent during 2005-06, surpassing the 8.1 per cent growth estimated by the Central Statistical Organisation in the advance estimates. In 2004-05, the economy registered a 7.5 per cent growth in GDP.
As per the revised estimate, the economy grew 9.3 per cent in the fourth quarter, as against 8.6 per cent in the same quarter in the previous year. The third quarter GDP growth in 2005-06 was 7.5 per cent.
While mining and quarrying recorded sharp decline to 0.9 per cent growth (1 per cent in advance estimate for 2005-06), as compared to 5.8 per cent in 2004-05, the electricity, gas and water supply showed growth of 5.3 per cent (5.4 per cent in advance estimate), as compared to 4.3 per cent in 2004-05.
The construction sector maintained a strong growth rate at 12.1 per cent during 2005-06 (12.1 per cent in advance estimate), as against 12.5 per cent recorded in the previous year.
Trade, hotels, transport and communication sector recorded growth rate of 11.5 per cent in 2005-06, as compared to 10.6 per cent growth in the previous year. Financing, insurance, real estate and business services grew by 9.7 per cent, as compared to 9.2 per cent in the previous year.
Country on the growth path: Chidambaram
Reacting to the revised estimates on national income for 2005-06, the Union Finance Minister, Mr P. Chidambaram, said the performance of the last two years showed that the country was on the growth path of around 8 per cent. "To sustain this growth rate, more reforms are necessary. I hope buoyed by this good news (of 8.4 per cent growth), there will be greater support for legal, administrative and structural reforms in different sectors of the economy," he said.
He also said that the growth performance in manufacturing, construction, trade, hotels, transport and communication, and financial services were all matters of satisfaction. The Finance Minister, however, expressed disappointment over the performance of the mining sector.
`Mining sector disappointing'
"I have flagged mining as a sector that requires wider and deeper reforms and newer models to explore, and excavate India's mineral resources. Electricity is somewhat disappointing as we expected a 6 per cent growth. If mining and electricity sectors had performed to our expectations, GDP growth would have perhaps been 8.5 per cent," Mr Chidambaram said.
The Finance Minister also said that he would be meeting the Prime Minister, Dr Manmohan Singh, on Wednesday evening where he would emphasise the need to address the issues plaguing the mining and electricity sectors.
He also said that the ministries concerned needed to come up with plans and strategies to tackle the current situation faced by the mining and electricity sectors.
Asked as to what had contributed to the significant increase in agriculture growth, Mr Chidambaram said this could possibly be due to the growth in horticulture and non-cereals.
The Finance Minister felt that the budgets of State Governments could provide for more capital investment in agriculture. On manufacturing, Mr Chidambaram indicated that he might interact with industry captains on June 16 or 17 to respond to their suggestions on policy actions for achieving 12 per cent manufacturing growth.
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