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Current Economic Statistics and Review For the
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Theme
of the week:
Estimates of Gross Domestic Product - July-September, 2007-08*
The
Central Statistical Organisation has released the estimates of quarterly
gross domestic product (GDP), expenditure on gross domestic product, (at
constant (1999-2000 prices)), for the quarter ended September 2007. The
press release also included the estimates of GDP and expenditures of GDP
for the first half of the current fiscal year. As per the standards set by
the IMF for data dissemination, the CSO has released the estimates for the
second quarter of the current fiscal year by end November 2007, i.e.,
within 2 months after the closure of the quarter. The present note
attempts to review the trends revealed by these estimates. Estimates
of Quarterly GDP at factor cost
The
GDP at factor cost, at constant (1999-2000) prices has been estimated Rs
710,578 crore for the second quarter of 2007-08 which has increased by 8.9
per cent over that in the corresponding quarter of he previous year, as
against the similar rise of 9.3 per cent in the previous quarter (Table
1). The growth is also lower than that achieved in the same quarter in the
previous year (10.2 per cent). It may be seen from Table 1 that the
agriculture sector witnessed a higher growth of 3.6 per cent during the
quarter than that registered in the corresponding quarter of previous year
(2.9 per cent). During the second quarters of each of the years beginning
2002-03, the agriculture sector recorded the maximum growth at 7.2 per
cent in 2003-04. Similarly, among all the first quarters during same
period, the growth in agriculture sector was maximum (3.8 per cent) in
2007-08. The
mining and quarrying sector has grown by 7.7 per cent during the second
quarter of 2007-08 as against 3.3 per cent in the previous quarter. The
sector witnessed the next highest growth after that in the same quarter of
2002-03 (9.9 per cent). The manufacturing sector experienced a
decelerating trend from previous 4 quarters and registered a growth of 8.8
per cent during the quarter under reference. The electricity, gas and
water supply sector registered a growth rate of 7.3 per cent, lower than
that in the previous quarter (8.3 per cent) and also of that in the same
quarter of previous year (8.1 per cent).
The construction sector, on the other hand, continued to grow at
more than 10 per cent similar to that in the previous quarter and the
corresponding quarter of previous year. Among the second quarters, since
2002-03, the sector recorded the maximum of 15.2 per cent growth in
2003-04. Among
the constituents of services sector, “trade, hotels, transport and
communication”, “financing, insurance, etc.”, recorded 10.6 to 11.4
per cent growth in the second quarter while the “community, social and
personal services, etc.”, sector grew only by 7.8 per cent in the
quarter. The finance, insurance, etc., sector has been increasing by more
than 10 per cent in the second quarter from 2005-06. The GDP at factor cost, at current prices, amounted to Rs 971,908 crore in the second quarter of the current fiscal year compared with Rs 856,761 crore in the corresponding quarter of the previous year, registering a growth rate of 13.4 per cent, lower than that in the same quarter a year ago (15.4 per cent), as also in the previous quarter (15.0 per cent) of the current fiscal year. While agriculture and allied activities grew by 11.0 per cent in the second quarter of 2007-08, industry and services sectors registered higher growth rates at 13.5 per cent and 14.0 per cent in that quarter. Expenditures
of GDP
The CSO has been publishing, at quarterly intervals, distributions
of gross domestic product at market prices by types of expenditure, such
as private final consumption expenditure (PFCE), government final
consumption expenditure (GFCE), gross fixed capital formation (GFCF),
change in stocks, valuables, exports and imports, from 2005-06 onwards.
These estimates, for the first and second quarters of 2007-08,
2006-07 and 2005-06, at constant and current market prices, have been
presented in Table 2.
The PFCE amounted to Rs 432,026 crores accounting for 55.2 per cent
of GDP at constant (1999-2000) market prices, in 2006-07.
The share has gradually decreased from 61.7 per cent in the first
quarter of 2005-06. The GFCE
has formed less than 10 per cent of GDP in the second quarter of 2007-08
as against 11.5 per cent in the corresponding quarter of 2005-06.
Thus total final consumption expenditure accounted for 64.9 per
cent GDP in the second quarter of 2007-08, compared with 70.8 per cent in
the same quarter of 2005-06. The
gross fixed capital formation which accounted for 30.3 per cent of the GDP
at constant market prices in the quarter under reference has increased
from 27.9 per cent in the same quarter of 2005-06.
The CSO has started compiling the estimates of valuables acquired
by household sector in the recent new series of national accounts.
The valuables formed at about 1.7 per cent of GDP constant market
prices whose share has marginally increased from that in 2005-06.
The shares of exports and imports fluctuated during the three year
period (in the first and second quarters) and stood at around 17 per cent
and 15.5 per cent, respectively, in the second quarter of 2007-08.
At current prices also, the components of expenditure of GDP
behaved more less on the same lines of those at 1999-2000 prices.
The shares in GDP at current market prices, of GFCF, change the
stocks, exports and imports had been higher than those at current prices.
Gross fixed capital formation as a percentage to GDP at current
market prices has increased to 32.3 per cent in the second quarter of
2007-08 from 27.5 percent in the first quarter of 2005-06. While the share
of exports in GDP at current market prices has increased from 19.8 per
cent in the first quarter of 2005-06 to 22.9 per cent in the second
quarter of 2007-08, that of imports has increased marginally from 23.6
percent to 24.9 per cent during the same period. Half-Yearly
estimates of GDP
The GDP at factor cost as 1999-2000 prices for the first half (H1)
year of 2007-08, stood at Rs 14,33,709 crore which has increased by 9.1
per cent compared with 9.0 per cent in the corresponding half-year of the
previous year (Table
3). The
GDP arising from has agriculture increased by 3.7 per cent in the first
half of the current fiscal year, compared with 2.8 per cent in the same
period of the previous year. The
manufacturing sector has registered double digit growth (10.2 per cent) in
H1 of 2007-08, but lower than the growth witnessed in the same period of
the previous year and also lower than that in the previous half year.
All the constituents of the services sector have recorded lower
growth rates in this half year period compared with those in the
corresponding period of 2006-07.
In nominal terms, GDP at factor cost has increased by 14.2 per cent
in the first half of 2007-08 compared with 15.0 per cent increase in the
same period of the previous year. The
manufacturing sector, which has decelerated growth in real terms, has also
witnessed declined growth over the previous two half-year periods. The
construction and services sectors also have witnessed declines in their
growth rates over the previous four half-year periods.
Finance, insurance, real estate, etc., sector has registered higher
growth (15.7 per cent) in the first half of 2007-08 than that of “trade,
hotels, etc.” and “community, etc.”, sectors in the same period.
Half-Yearly
expenditure of GDP
The data on expenditure of GDP on half yearly basis are available only from 2005-06; and those for 2007-08, 2006-07 and 2005-06 at 1999-2000 prices and at current prices are presented in Table 4. The share of PFCE in GDP of the first half of 2007-08
stood
at 57 per cent which has marginally declined from 60.5 per cent in H1 of
2005-06. The share of GFCF has
increased to 30 per cent from 27.0 per cent during the same period.
Exports and imports shared each at around 17 per cent wherein the former
having marginally higher share than the latter.
At current prices, similar trends have been observed in the above
set of shares. While the share
of PFCE has been marginally lower than those at 1999-2000 prices, those of
exports and imports are much higher at current prices.
The GFCF stood at 31.8 per cent in H1 of 2007-08 compared with 28.4
per cent in H1 of 2005-06.
The trends in the shares of the constituents for full year, from
2002-03 to 2006-07 are given in Table 5.
For the complete fiscal year 2006-07, the PFCE accounted for 57.2
per cent of GDP at constant market prices (1999-2000 prices) which has
decreased from near 63 per cent in 2002-03.
The gross capital formation (GFCF + change in stocks) formed 30.7
per cent of GDP at constant market prices in 2006-07 which has increased
from 24.2 per cent in 2002-03. The
rise in the rate, also known as investment rate has been contributed by
both fixed assets formation and change in stocks. At
current prices, the share of PFCE has been lower marginally at 56.4 per
cent than that at 1999-2000 prices; that of GFCE, on the other hand, at
11.3 per cent is is higher than that (10.7 per cent) at 1999-2000 prices.
The GFCF rate at current prices stood at 29.5 per cent, which has
increased from 23.8 per cent in 2002-03 and this rate has been
consistently higher than the real rate.
The exports and imports as percentages to GDP at current market
prices are higher at 23.0 per cent and 25.8 per cent, respectively, than
those at real terms; and they have increased over time form 14.5 per cent
and 15.5 per cent in 2002-03, respectively.
The half-yearly estimates of expenditure of GDP for H1 of 2007-08
as seen from above are quite comparable and follow a pattern.
Annual
Aggregates
The CSO has provisionally placed the growth rate of real GDP for
2006-07 at 9.4 per cent compared with 9.0 per cent in 2005-06 (Table 6).
It has been observed from the date presented so far, that the
economy has remained buoyant to capture a growth of
above
8 per cent during the last four year series (except 2004-05).
While the industry sector (comprising mining and quarrying,
manufacturing, electricity, gas and water supply, and construction) has
experienced progressively increasing growth rate from 7.1 per cent in
2002-03 to 10.9 per cent in 2006-07, the services sector witnessed similar
growth increasing from 7.4 per cent to 11.0 per cent during the same
period. Agriculture sector,
however, experienced fluctuating growth from – 7.2 per cent to 10.0 per
cent during the same period perhaps due to vagaries of nature.
During the current fiscal year so far (first half-year), the real GDP has increased by 9.1 per cent compared with 9.9 per cent in the same period of previous year. The slow down has been mainly on account of decelerated growth in manufacturing, electricity, gas and water supply, and services sectors, although agriculture, mining and quarrying and construction activities performed well over that in the previous year. The real GDP growth has been projected by various agencies to be at around 8.5 to 9.0 per cent in 2007-08. *
This note has prepared by Dr. K. S. Ramachandra Rao.
Highlights of Current Economic Scene AGRICULTURE The
tender floated by PEC Ltd, for import of 3.5 lakh tonnes of wheat has got
moderate response with only 6 companies offering an aggregate quantity of
6.30 lakh tonnes at prices ranging from US $ 395.88 to US $ 483 per tonne
on cost & freight basis. J
K International is the lowest bidder offering 2.5 lakh tonnes
including 65,000 tonnes at the lowest quote of US $ 395.88 per tonne for
delivery at Mundra port. Starcom has
offered the highest price of US $ 483 per tonne for 40,000
tonnes at Tuticorin. The final decision taken on December 8, 2007 by
the central government has revealed that J K International of Australia,
has bagged the latest PEC wheat tender for purchase of 1.5 lakh tonnes at
a weighted average price of US $ 369.9 per tonne, cost and freight. According
to latest Crop Weather Watch Report published by Ministry of Agriculture
as on December 7, 2007 rabi sowing of wheat, oilseeds, pulses and coarse
cereals have continued lagging behind that of previous season, due to dry
weather in large parts of northern and central Food
Corporation of According
to Solvent Extractors Association, oil meal exports have declined by 10
per cent between April-November 2007-08 to 22.88 lakh tonnes from 25.49
lakh tonnes during the same period last year. On the Contrary to the
overall decline in exports, castor meal exports have jumped by 82 per cent
to 2.06 lakh tonnes from 1.13 lakh tonnes year-on-year during the same
period. While, exports of soyabean, rapeseed, groundnut and rice bran
extractions have been lower during the first eight months of this
financial year. The decline in oilmeal exports during April-November
2007-08 was a result of lower imports by
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