What next with GDP growth?
There is a lot of excitement about high GDP growth in 2003-04. Growth in the 2nd quarter was 8.4%. CMIE recently upgraded their estimate for growth in 2003-04 from 7.4% to 8.2%. There is an undeniable magic in getting above 7.5% – it upgrades India’s standing in the world, and improves investor confidence. More good news is in the offing. The corporate results that will come out in coming months are also likely to show strong growth rates of revenues and profits. Jaswant Singh has said that the next two quarters will also show growth above 8%. Is this growth simply a low base effect? With the drought last year, growth dropped to 4.3%. Suppose this year had merely been a return to the trend growth rate of 6%. Then we should have got growth of 7.7%. We seem to be faring a bit better than this. What does 2004-05 hold? India has had only one episode in history, where growth in consecutive years was above 7%: This was in 1994-95, 1995-96 and 1996-97, where growth was 7.25%, 7.34% and 7.84%.
