The latest Economic Survey 2011/12 released by India’s Ministry of Finance states that GDP growth rate for 2011/12 is estimated at 6.9% (factor cost at 2004-05 prices). The Indian economy is expected to growth at 7.6% in 2012-13 and 8.6% in 2013-14. The main reason for a gradual recovery in the next two years is due to the expected decline in overall investment rate. These projections are based on assumptions regarding factors like normal monsoons, reasonably stable international prices, particularly oil prices, and global growth somewhere between where it now stands and 0.5% higher.
The major highlights of state of Indian economy in fiscal year 2011/12 are as follows:
- Gross capital formation during the third quarter of 2011-12 as a ratio of GDP was at 30%, down from 32% a year ago.
- Agriculture and allied sectors are estimated to achieve a growth rate of 2.5% in 2011-12 with food grains production likely to cross 250.42 million tonnes owing to increase in the production of rice in some States.
- The industrial sector has performed poorly, retreating to a 27% share of the GDP.
- The services sector continues to be a star performer as its share in GDP has climbed from 58% in 2010-11 to 59% in 2011-12 with a growth rate of 9.4%.
- Industrial growth pegged at 4-5 percent, expected to improve as economic recovery resumes.
- Inflation on WPI was high but showed clear slow down by the year-end.
- WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012. Calibrated steps initiated to rein-in inflation on top priority.
- India remains among the fastest growing economies of the world. Country’s sovereign credit rating rose by a substantial 2.98 percent in 2007-12.
- Fiscal consolidation on track - savings & capital formation expected to rise.
- During the first half of 2011-12, India’s export growth was at 40.5%, but it has been decelerating since. Imports have growth rapidly, by 30.4% during 2011-12 (April-December).
- The current account deficit (CAD) has widened to $32.8 billion in the first half of 2011-12, compared to $29.6 billion during the corresponding period of 2010-11.
- The foreign exchange reserves increased from US$279 billion at end March 2010 to US$305 billion at end March 2011. Reserves varied from an all-time peak of US$322.2 billion at end August, 2011 and a low of US$292.8 billion at end-January, 2012. It covered nearly the entire external debt stock.
- In 2010-11, the CAD of US$ 45.9 billion was financed by the capital account surplus of US$ 62.0 billion and it resulted in accretion to foreign exchange reserves to the tune of US$ 13.1 billion (US$ 13.4 billion in 2009-10).
- Central spending on social services goes up to 18.5% this fiscal from 13.4% in 2006-07.
- MNREGA coverage increases to 5.49 crore households in 2010-11.
- Sustainable development and climate change concerns on high priority.