Confirming and even exceeding some projections, Economic Survey 2007-08 today said the economy has moved decisively "to a higher growth phase."
It projected full year gross domestic product (GDP) at factor cost at constant 1999-2000 prices to grow at 8.7%, which is marginally higher than the Reserve Bank of India (RBI) projection of 8.5% for 2007-08.
This represents a deceleration of growth (spread across most sectors barring power and various services) from the "unexpectedly high growth rates" witnessed in the past two years, the survey said. It pointed out that an upward adjustment to the 2007-08 projection was possible keeping in mind the revisions in previous years. GDP growth for 2006-07 was initially estimated at 9.2% in February last year, 9.4% in May and finally at 9.6% in the quick estimates released this January.
GDP at current market prices is projected at Rs 46,93,602 crore in 2007-08 - making it the first time that the size of the economy at market exchange rate will cross $1 trillion. At the nominal exchange rate (average of April-December 2007), GDP is projected at $1.16 trillion during the year while the per capita income is pegged at $1,021.
On the whole, the survey, which provides an overview of the 10th Five Year Plan (2002-07) achievements, pointed out that GDP growth at market prices has exceeded 8% in every year since 2003-04. The projected 8.7% growth is fully in line with this trend, it added.
"The higher economic growth trajectory and the projected growth of 8.7% in 2007-08 is based on a quantum jump in savings and investment rates," Finance Minister P Chidambaram said in a statement after placing the survey in Parliament. The rate of investment (gross capital formation) rose to an unprecedented 35.9% of GDP in 2006-07, and is projected to increase in 2007-08. Similarly, the savings rate scaled new highs in 2006-07 reaching 34.8% of GDP in the year.
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