Report

I NTRODUCTION 15
The period from 1992–93 and 1993–94 was the
period of recovery from the crisis while the period from
1994–95 to 1996–97 was marked by the high growth
of economy (Table 1.10). The growth rate of GDP
averaged as much as 7.5% per annum in the latter,
higher from 5.5% in the former. This was the only
period in India’s economic history during which real
GDP growth exceeded 7% consecutively over a period
of three years. The sharp acceleration in the rate of
growth of overall GDP was the result of phenomenal
growth of 10.8% per annum in the industrial sector.
Table 1.10 Growth rate of GDP at Factor Cost at
constant prices in India, 1992–2006 (%)
Year
Growth Rate of GDP at Factor Cost
1992–93 5.1
1993–94 5.9
1994–95 7.3
1995–96 7.3
1996–97 7.8
1997–98 4.8
1998–99 6.5
1999–00 6.1
2000–01 4.4
2001–02 5.6
2002–03 4.3
2003–04 8.5
2004–05 6.9
2005–06 9.0
2006–07 9.2
Source: Economic Suvey, various issues.
The phase from 1997–98 to 2002–03 was marked
by a general deceleration in growth with the average
rate of growth during this period turning out to be
5.3%., which was much lower than the average growth
of 7.5% per annum recorded during the period of high
growth from 1994–95 to 1996–97. The reason is
attributed to the steep decline in industrial growth, led
by a severe slowdown in the manufacturing sector.
Within this second phase, real GDP growth, after
dipping to 4.8% in 1997–98, recovered during the years
1998–99 and 1999–2000 to over 6%. One of the
factors contributing to this recovery was the high
growth emanating from service sector, and within the
service sector, the growth of ‘community, social and
personal services’, particularly ‘public administration
and defence’ in 1997–98, with its lagged effect persisting
till 1999–2000. In 2000–01, growth of overall GDP
dipped to 4.4%. This was a result of poor performance
of agriculture, coupled with significant deceleration in
the growth rate of GDP from the service sector,
particularly ‘finance, insurance, real estate and business
services’. In 2002–03, the rate of growth registered was
again 4.3% as compared to 5.8% in 2001–02, which
has been an outcome of a sharp fall in agricultural
growth to a negative of 3.1% owing to the drought
conditions.
Buoyed by a rebound in agriculture sector, and
strongly helped by improved performance in industry
and services, the economy registered a growth rate of
8.5% in 2003–04. In spite of a deficient south-west
monsoon, hardening international prices of oil and steel
and extensive damage of life and property caused by
tsunami, the economy managed to maintain the growth
momentum, with the growth recorded at 6.9% in
2004–05. The growth of 9% and 9.2% in 2005–06
and 2006–07, respectively surpassed expectations.
While the uneven pattern in agriculture continued with
growth estimated at 6% and 2.7% in the two recent
years, services maintained its vigorous growth performance.
There were distinct signs of sustained improvements
on the industrial front.
The economy has moved decisively to a higher
growth phase, with the growth in GDP exceeding 8%
each year since 2003–04. The projected economic
growth of 8.7% for 2008–09 is in line with this trend.
The contribution of agriculture to overall growth
of economy has decelerated from 28.4% in 1993–94
to 19.8% in 2003–04. The share of manufacturing
remained between 16–17%. The major impetus to
growth has come from service sector. The service sector
accounted for 38.6% of GDP in the 1980s and 44.3%
in the 1990s. It rose to 54.1% in 2001–02.
India, in the initial era of planning adopted an
‘inward looking’ strategy of industrialisation. India
Fig 1.6 Share of agriculture and manufacturing
in GDP: 1993–2003
Source: National Account Statistics