Yesterday CSO released estimates of gross domestic product for the third quarter (October-December) of 2011-12. It stated that “Quarterly GDP at factor cost at constant (2004-05) prices for Q3 of 2011-12 is estimated at Rs. 13,39,603 crore, as against Rs. 12,62,794 crore in Q3 of 2010-11, showing a growth rate of 6.1 per cent over the corresponding quarter of previous year.” It also said that 2009-10 & 2010-11 Quarterly estimates along with the Growth Rates are revised now. CSO said that “The revision in annual estimate of 2009-10 is mainly on account of using ASI data for 2009-10 and the new series of IIP for 2010-11 in the manufacturing sector.” The Sector wise figures for the third quarter were more surprising when it stated that “The growth rate in ‘agriculture, forestry & fishing’, ‘mining and quarrying’ and ‘manufacturing’ is estimated at 2.7 per cent, (-) 3.1 per cent and 0.4 per cent, respectively in this period. (over 2010-11 at constant prices)”
My perspective:
Many may think what’s Shocking in this GDP growth rate and Why it is titled so? It is shocking because despite of the higher inflation rate which remains at 7.65% CPI (YOY combined rate i.e. both rural and urban rate for the month January, 2012) [Note: 8.92% of Wholesale inflation during Q3] we had achieve the GDP growth rate of 6.1% growth rate for the Third Quarter. This means that total GDP at Factor Cost (at 2004-05/ Constant Prices) for 2011-12 (April – December) is at 6.9% which was lower compared to 8.1% in 2010-11 for the same period (April-December).
The estimate shows that there is a decline in Gross Fixed Capital Formation (GFCF), both in terms of current and constant prices it had declined from 29.8 & 32.3 in 2010-11 to 27.6 and 30.0 in 2011-12 respectively for the same period (Q3). This is really a concern in the long run. If India aims to achieve the Growth of 7.0% then GFCF plays a vital role. Many people, Economist and Policy makers in India are presently looking forward for the upcoming Union Budget. The upcoming Budget plays vital role for people in India and also for their Growth rate. We need to wait and watch what’s new in the upcoming Union Budget that will drive the economy towards (so called) faster and inclusive growth
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