Gdp Growth Rate For 95-96 Estimated At 7.1 Per Cent

India's gross domestic product (GDP) grew by 7.1 per cent during 1995-96, according to the latest estimate by the Central Statistical Organisation (CSO). At 1980-81 constant prices, GDP is estimated at Rs 274,209 crore, while at current prices, the CSO estimates put the figure at around Rs 955,787 crore.

The latest CSO figures, expected to be released by the government today, should set at rest speculation over what the actual GDP growth rate was in 1995-96, the final year of the Eighth Plan.

The 1995-96 Economic Survey presented by the Rao government in February had estimated the GDP growth rate at 6.2 per cent. But the Reserve Bank of India (RBI) in April 1996 scaled it down to just six per cent.

 

Subsequently, the update on the 1995-96 Economic Survey, presented in July 1996, revised upwards the GDP estimate for last fiscal year at seven per cent. Within three months, however, the RBI put out a scaled-down GDP growth rate figure of 6.2 per cent.

It is not yet clear what reasons the CSO report will cite in support of its estimate of a higher GDP growth rate for 1995-96. The UF government's update on Economic Survey had argued that even though agriculture growth was subdued, the 7 per cent GDP growth was achieved because of a 11.7 per cent industrial growth and a 7 per cent growth in the services sector.

But the RBI stated in October 1996 that the GDP growth rate for 1995-96 had to be scaled down to 6.2 per cent as "the latest data on agricultural performance showed practically no value addition." But this did not deter the finance ministry to continue to maintain a GDP growth rate of 7 per cent, which is the figure it put out at the Economic Editors' Conference in November. It had maintained that growth in terms of GDP at constant factor cost improved from 0.8 per cent in 1991 to 6.3 per cent in 1994-95 and 7 per cent in 95-96.

The sectoral break-up of the GDP growth was not immediately available. But the CSO figures will have significant implications. The growth rate projections for the Ninth Plan will now have to keep in mind the 7.1 per cent growth already achieved in 1995-96. The new figure will also mean that in the fifth year of the reforms, the GDP growth rate crossed the seven per cent barrier, after starting off with 0.4 per cent growth rate in 1991-92, 5.3 per cent in 1992-93, 3.9 per cent in 1993-94 and 6.3 per cent in 1994-95.

Since 1950-51, the GDP growth rate has exceeded the seven per cent mark only seven times -- 7.3 per cent in 1958-59, 7.4 per cent in 1964-65, 7.7 per cent in 1967-68, 9.2 per cent in 1975-76, 7.2 per cent in 1977-78, 7.4 per cent in 1983-84 and 9.9 per cent in 88-89. The average economic growth in the first four years of the Eight Plan has been 5.9 per cent as against plan target of 5.6 per cent. The approach paper for the Ninth Plan estimates the GDP at factor cost to be 5.92 per cent at the end of the Eighth Plan.

Sectorwise, the Plan paper has estimated agricultural growth to be 3.5 per cent at the end of the Eighth Plan overshooting the target of 3.1 per cent. Industrial growth is estimated at 7.24 per cent, lower than the target of 7.6 per cent. The services sector is estimated to grow at 6.66 per cent at the end of the Eighth Plan against the target of 6.1 per cent.