Economic Survey 2009-10: GDP Outlook

Introduction:
Year 2009-10 started as a difficult Year for Indian economy. The Global Economic Slowdown had retarded the growth of our economy more prominently in the second half of 2008-09. This was a time when the Global Financial crisis was at its full swing and had spread its tentacles to all parts of the word.
Base year:
Here, a point has to be noted that with the release of the quick estimates of National Income for year 2008-09, the central statistical organization (CSO) and changed the base year of its NAS (National Accounts Statistics) from 1999-2000 to 2004-05.
Growth Projects:

1. The overall growth of GDP at factor Cost at constant prices in 2008-09 as per revised estimates released by the Central statistical organization was 6.7 %.
2. The turnaround in the Indian economy came in the second quarter of 2009-10 when India’s economy grew by 7.9 %.
3. As per the advance estimates for GDP for 2009-10 released by the central statistical organization the economy is expected to grow at 7.2% in 2009-10.
4. Industry and service sectors are expected to grow by 8.2 & 8.7% respectively.
5. The manufacturing sector had shown a declining trend for last 8 quarters (since 2007-08), but now has got some momentum.
6. There was also a decline of agricultural output by 0.2 % in 2009-10 due to poor Monsoons.
7. The economic survey expected that economy is likely to grow by 8.75% in 2010-11 and return to 9% growth in 2010-12. Following chart shows the growth of GDP (at Factor Cost 2004-05 prices)

8. Over all Savings rate for 2008-09 is 32.5% of GDP which is slightly less than the previous year 2007-08 (34.9%). The Capital Formation rate for 2008-09 is 34.9% of GDP which is too slightly less than last year 2007-08 (37.7%)

Per capita National Income for the Year 2009-10 is Rs. 43749 (factor cost at current prices) compared to Rs. 40141 for the previous year 2008-09. The following graphic shows the trend of the per Capita Net National Income:

Per Capita Income Growth:

1. The growth rates in per capita income and consumption are the gross measures of welfare in general. The percapita income as well as consumption has increased, yet the growth in these two parameters has decreased. This reflects the decline in overall GDP growth.
2. Growth in per capita income in 2007-08 was 8.1% which declined to 5.3% in 2009-10.
3. Growth in percapita consumption was 8.3% in 2007-08 which has declined to 2.7 % in 2009-10.
4. The following graphics show the trend of the per capita income and consumption at 2004-05 market prices.
   

Survey Recommendations and Important Notes:

1. The Survey recommended a gradual roll back of fiscal stimulus measures undertaken over the last 15-18 months. The prime minister’s Economic Advisory Council had also suggested the partial rollback of stimulus measures.
2. The Survey warns a "higher-than-anticipated" general level of inflation.
3. The Survey recommended effective steps to be taken to remove supply-side bottlenecks together with other policies.
4. The survey recommended that there is a need for improving government finance by raising tax and non tax revenues and controlling deficit.
5. The economy is projected to grow by 7.2 per cent this fiscal with industrial and services sectors growing at 8.2 and 8.7 per cent.
6. Survey says that full recovery is likely to be attained over the next two fiscals with up to 8.75 per cent growth in 2010-11 and nine per cent in the 2011-12.