Highlights of Economic Survey for FY09

The speed at which India returns to the high growth path in the short term depends on the revival of the global economy, particularly the US.

If the US economy bottoms out by September there will be good possibility for the Indian economy repeating its 2008-09 performance

The Economic Survey 2008-09 was presented to the Parliament on Thursday by the Finance Minister Pranab Mukherjee. The Finance Ministry's annual economic report card states that the speed at which the Indian economy returns to the high growth path in the short term depends on the revival of the global economy, particularly the US and the Government’s capacity to push some critical policy reforms in the coming months.

It went on to add that if the US economy bottoms out by September there would be good possibility for the Indian economy repeating its 2008-09 performance i.e. around 7% (plus or minus 0.75%) in the fiscal 2009-10 (assuming a normal monsoon). However, in the event of a more prolonged external economic downturn, the revival of the global economy/US being delayed until 2010, the Indian growth may moderate to the lower end of the range, it added.

The following are some of the highlights of the Economic Survey FY09.

1. Economic growth decelerates to 6.7% in 2008-09 compared to 9% in 2007-08 and 9.7% in 2006-07.
2. Per capita growth at 4.6%.
3. Deceleration in growth spread across all sectors except mining and quarrying; agriculture growth falls from 4.9% in 2007-08 to 1.6% 2008-09.
4. Manufacturing grows at 2.4%, slowdown attributed to fall in exports and a decline in domestic demand.
5. Global financial meltdown and economic recession in developed economics major factors in India’s economic slowdown.
6. Investment remains relatively buoyant, ratio of fixed investment to GDP increased to 32.2% in 2008-09 compared to 31.6% in 2007-08.
7. Fiscal deficit to GDP ratio stands at 6.2%.
8. Credit growth declines in the later part of 2008-09 reflecting slowdown of the economy in general and the industrial sector in particular.
9. Increased plan expenditure, reduction in indirect taxes, sector specific measures for textile, housing, infrastructure through stimulus packages provides support to the real economy.
10.Merchandise export grows at a modest 3.6% in US Dollar terms while overall import growth pegged at 14.4%.
11. A large domestic market, resilient banking system and a policy of gradual liberalisation of capital account to help early mitigation of the adverse effect of global financial crisis and recession.
12. Sharp dip in the growth of private consumption a major concern at this stage.
13. Medium to long-term capital flows likely to be lower as long as the de-leveraging process continues in the US economy.
14. Revisiting the agenda of pending economic reforms imperative to renew the growth momentum.