FY08 GDP growth to be 8.7% vs 9.6% (YoY): CSO feb

By Abhijit Neogy, CNBC-TV1808The government has scaled down its growth forecast for the current fiscal amidst global concerns of a slowdown. Agricultural growth continues to be a drag and manufacturing has also declined to single digit growth. CNBC-TV18’s Abhijit Neogi says that despite these trends, the FM is still optimistic about 9% growth this fiscal.

It may well be the first signs of the Indian growth engine slowing down. As per the advance estimates of GDP by the Central Statistical Organisation, the growth forecast for 2007-08 has been scaled down from 9.6% for the previous year to 8.7%. The farm sector has been the biggest drag growing at just 2.6% for the current fiscal as against 3.8% for the previous year. This is against the 11th Plan’s aim of 4% annual growth.
Manufacturing is down to single digit growth, coming in a shade above 9% as against 12% for the previous year. Even construction activity has slowed down considerably and is growing at 9.6% as opposed to 12% last year.

But the FM says he is not worried yet. He is optimistic of agricultural growth picking up. The reason for his optimism is a release put out by the Ministry of Agriculture that production of crops like wheat, soya and cotton are expected to touch record levels this year.
The FM also says manufacturing will bounce back to double-digit growth thanks to continued investment demand. He hopes that both these factors will pull growth in the current fiscal to 9%.
While we may be insulated from the US recession to a large extent, experts say these figures could well be an indication that the growth story may be losing fizz.