SME TImes News Bureau | 04 Jul, 2009
The growth in real Gross Domestic Product (GDP) at factor cost has declined from 9 percent in 2007-08 fiscal to 6.7 percent in 2008-09, the government said on Friday.

The Central Statistical Organisation had released the figures as per the revised estimates for last fiscal, Finance Minister Pranab Mukherjee told Lok Sabha in a written reply.

The sector-wise growth of GDP (factor cost at constant 1999-2000 prices) in agriculture, forestry and fishing in 2007-08 was 4.9 percent, but declined to 1.6 percent in 2008-09. Industry witnessed a growth of 8.1 percent in 2007-08, but it reduced to 3.9 percent in 2008-09.

The GDP growth also declined in manufacturing; electricity, gas and water supply; construction; services; trade, hotels, transport and communication; and financial, insurance, real estate and business services, he said.

However, it witnessed a higher growth rate of 13.1 percent last fiscal, compared to 6.8 percent the previous year in community, social and personal services, and from 3.3 percent to 3.6 percent respectively in mining and quarrying sector.

"The lower growth in GDP in 2008-09 could be attributed to subdued demand conditions, global economic crisis, risk aversion, caution in extension of credit facilities and due to agricultural production being influenced by the vagaries of nature," Mr. Mukherjee said.

He also said the global financial crisis impacted the domestic economy initially through reversal of portfolio capital flow, which had knock-on effect on the stock market and the exchange rates through creating supply-demand imbalance.

"Exports were adversely affected and witnessed negative growth rate since October 2008, on account of global recessionary conditions. The growth rate of Indian economy, as a result, slowed down to 6.7 percent during 2008-09 as against 9 percent the previous year," he said.

However, he said, the effect of recession had been minimal on the economy vis-a-vis most other countries.

"An unimpaired financial system, large domestic market and fiscal and monetary stimulus packages have been responsible for the resilience exhibited by the Indian economy against the adverse impact of global economic slowdown," he added.