Archive for June 4th, 2007

Indian growth beats all expectations

June 4, 2007

Indian GDP grew by 9.4% in 2006-07 (I blogged about it here). To add on to the previous blog, Agriculture grew by 2.7%, Industry by 11% and Services by 11% respectively.

RBI in its quarterly macroeconomic report in January 2007 had given the GDP projections by the leading banks/financial institutions for the year 2006-07. Here is the summary:

Table 12: Projections of Real GDP for India by Various Agencies for 2006-07 (Per cent)

Agency Overall Growth Agri Industry Services Month of Projection
ADB a) 7.8 .. .. .. Sep-06
ICRA a) 7.4-8.2 2.0 8.2-9.7 9.1-9.7 Jan-06
  b) 8.1 1.0 10.8 9.5 Jul-06
CMIE a) 8.5 2.6 9.7 10.3 Dec-06
NCAER a) 8.1 .. .. .. Nov-06
  b) 8.4 2.7 9.1 10.2 Jan-07
IMF a) 7.3 @ .. .. .. Apr-06
  b) 8.3 @ .. .. .. Sep-06
RBI a) 7.5-8.0 .. .. .. Apr-06
  b) Around 8.0 .. .. .. Oct-06
JP Morgan a) 8.0 .. .. .. Oct-06
  b) 8.4 .. .. .. Dec-06
Citigroup a) 8.3 .. .. .. Sep-06
  b) 8.3 .. .. .. Jan-07
ABN AMRO a) 7.5 .. .. .. Sep-06
  b) 8.2 2.4 8.4 10.0 Dec-06
Indicus Analytics a) 7.9 .. .. .. Sep-06
  b) 8.9 3.0 9.7 10.5 Dec-06
.. : Not Available.      @ : Calendar year 2006.

All the analysts were way off the mark barring Indicus Analytics that was closest to the real figure of 9.4%. As most revised their estimates on December 2006, we cannot even say that estimates were hardly revised during the year.

Most of them were right on agriculture sector but got it wrong on Industry and Services. Not very good times for the economists into estimation etc. They can only take solace from the fact that mostly all got it wrong.

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Assorted Links

June 4, 2007

1. Despite some strong opposition it seems foreign reserves are going to be used for infrastructure funding. Business Standard points out to a report from Ernst & Young that says corruption has led to lower financing available for infrastructure.

2. Rupee Appreciation has been great for FIIs.

3. RBI asks Banks that wish to be an insurance player to explain how they would arrange huge sources of capital needed in the insurance business when the banks would need extra capital for banking business in wake of Basel II norms.

4. Mythili Bhushnurmath says we are moving to investment driven growth. I think we need more data.  It is exactly what Economic Advisory Council suggested.

5. Business Standard points out to a study from National Housing Bank that says India needs to build 26,300 houses every day to meet the housing requirements of all segments of the population. It says housing finance is not available to rural areas:

Analysing the performance of banks in housing finance over a period of five years from 1999-00 to 2004-05, the report reveals that loan disbursements went up by 68 per cent during the period to Rs 86,034 crore from Rs 58,623 crore.  

The share for rural areas in the total housing finance had remained constant at 10.3 per cent and share of semi-urban areas declined from 22.4 per cent to 15.4 per cent, whereas it went up to 47.3 per cent in 2005 in metropolitan areas from 37.2 per cent in 2000.

What got me stirred was“this would would require an investment to the tune of Rs 10 lakh crore!!”


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