New Delhi: Buoyed by good performance of the farm sector, economic growth in the current fiscal is estimated to rise to 4.9 percent, though it is below potential as manufacturing and mining sectors continue to remain a cause of concern.
"The growth in GDP during 2013-14 is estimated at 4.9 percent as compared to the growth rate of 4.5 percent in 2012-13," according to advanced estimates released Friday by the Central Statistics Office (CSO).
Part of the improvement can be attributed to statistical reasons as the CSO had earlier lowered growth for 2012-13 fiscal to 4.5 percent in its revised estimates from an earlier provisional forecast of 5 percent.
While the Chairman of the Prime Minister's Economic Advisory Council C Rangarajan described it as "encouraging news...Indicating that (economic) slowdown has bottomed out,"the India Inc said the growth was below potential and the government would need to take steps to boost manufacturing which showed a contraction of 0.2 percent.
"The GDP estimates (are) still below potential...What is worrisome is the poor performance estimated in the mining and manufacturing sectors which are in the red. The growth rate would have been lower had it not been for the favourable base effect of last year," CII Director General Chandrajit Banerjee said while commenting on advance GDP estimates of the CSO.
However, as per the CSO estimates, India is poised to become a USD 1.7 trillion economy and per capita income will soar by 10.4 percent to Rs 74,920 in 2013-14.
For 2013-14, the CSO has projected a growth rate of 4.6 percent in agriculture and allied sectors, up from 1.4 percent a year earlier.
Manufacturing, however, is expected to register a contraction of 0.2 percent in this financial year compared with growth of 1.1 per cent in the previous year.
Mining and quarrying is likely to contract 1.9 percent, compared with a 2.2 percent decline in production a year ago.
The latest estimate of 4.9 percent for 2013-14 implies that the pace of economic expansion improved in the second half, given that GDP grew 4.6 percent in the April-September period.
"To achieve higher growth going forward, the principles of sound governance, clear policies and effective implementation should be adhered to. Also, there is a need to shift to time-bound decisions over time-bound actions " said FICCI President Sidharth Birla while commenting on CSO estimates.
CRISIL's Chief Economist D K Joshi said, "Manufacturing and mining sectors are in bad shape which is worrying for development."
According to the advance estimates, the services sector, including finance, insurance, real estate and business services sectors, is likely to grow 11.2 percent this year compared with 10.9 percent in 2012-13.
Growth in construction is likely to improve to 1.7 percent from 1.1 percent in 2012-13.
According to the CSO's advance estimates, growth in electricity, gas and water production is likely to improve to 6 percent in 2013-14 from 2.3 percent in 2012-13.
The trade, hotel, transport and communication sectors are projected to grow by 3.5 percent, as against 5.1 percent in the previous financial year.
Community social and personal services growth would be better at 7.4 percent, compared with 5.3 percent previously.
The CSO releases advance GDP estimates before the end of the financial year to enable the government to formulate various estimates for inclusion in the Budget.
Per capita income in real terms (at 2004-05 prices) during 2013-14 is likely to attain a level of Rs 39,961 as compared to the first revised estimate for the year 2012-13 of Rs 38,856.
First Published: Friday, February 7, 2014, 17:54