Indian GDP growth in Q2 likely to shoot up to 6 per cent

[Ulhas Joglekar]

The Economic Times Online
Wednesday DEC 29 1999
GDP growth in Q2 likely to shoot up to 6 per cent
MK Venu
NEW DELHI 28 DECEMBER
THE country's GDP growth during the quarter (July-September) is likely to
scale up to 6 per cent, on the back of an improved performance in the
industrial sector.
The Central Statistical Organisation (CSO) will release its quarterly update
for GDP growth at the end of this week. Sources said, GDP growth during the
July-to-September quarter could be 6 per cent, up from 5.5 per cent in the
preceding quarter (April-June). Sources said, the impressive pick-up in
industrial growth to 7 per cent this fiscal, will certainly reflect in a
higher GDP growth during July-September.
Both the RBI and finance ministry had been anticipating a GDP growth of
about 6.5 per cent this fiscal, though agencies such as the World Bank have
been less optimistic in projecting a growth of less than 6 per cent. The
second quarter GDP figures to be released later this week will clear the air
in this regard.
In fact, the World Bank's projection was recently challenged by a senior
finance ministry official who asserted that a pick-up in growth was palpable
this fiscal, and must reflect in better GDP figures. Sources said, if
industrial growth is recorded at 7 per cent, then it will be easy to achieve
a 6 per cent GDP growth in July-September.
Industry has about 27 per cent weightage in the overall GDP. The service
sector has a 48 per cent weightage and agriculture another 25 per cent. In
the first quarter (April-June), when GDP growth was shown at 5.5 per cent,
the industry grew by 6 per cent, services by 7 per cent and agriculture by
2.8 per cent.
Officials said, there are no significant changes in the growth in the
services and agriculture sector in the second quarter, but there is a marked
improvement in the value-added growth in the industry. This alone will boost
the GDP to 6 per cent-plus.
However, GDP will gain a substantial boost when CSO will deci-de early
January the real contribution of the software sector to national
productivity. At present, the software industry is shown to contribute
barely Rs 500 crore of value addition on a historical basis. With the
software industry having exploded in the past few years, the CSO is changing
its methodology for calculating IT's contribution to the overall GDP.
Officials said, the changed methodology will reflect in the advance
estimates for ’99-2000 to be released in February. With that change
incorporated, the GDP growth is certain to touch 6.5-7 per cent this fiscal.
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