GDP growth estimates revised upward to 10% - India enters the ranks of low middle-income countries

[gorah_pindu]

India becomes a low income country years ahead of expectations:

India climbs up the income ladder Economic growth and an appreciating rupee will see India break into the ranks of lower middle-income countries this fiscal year, a few years earlier than expected. At $1,021, the Prime Minister�s Economic Advisory Council has projected that per capita income would increase over 25.58 per cent this fiscal, against $831 in 2006-07. This would put India in the same category as China, though the latter�s per capita income was estimated at $2,165 in 2006. This year�s projected increase in per capita (in dollar terms) is nearly double the average 13 per cent growth between 2003-04 and 2006-07. In the same four-year period, GDP grew an average 8.6 per cent. Council member and ICRA chief economist Saumitra Chaudhuri said that using Central Statistical Organisation data, the council arrived at 2006-07�s per capita income in dollar terms assuming an exchange rate of Rs 45 per dollar. For the current year�s projection, the exchange rate assumed is Rs 41 to the dollar. �It is a commendable achievement, but there is so much to do. $1,000 is not a big amount these days,� he said. However, World Bank lead economist in India Dipak Dasgupta described it as a �huge thing� in the broader scheme of things. �It really is the effect of higher GDP growth. The exchange rate does not have that big a role,� he said. India is currently classified as a low income country by the World Bank, which categorises its 185-member countries on the basis of their 2006 gross per capita into four groups: Low income countries (per capita income of $905 or less), lower middle-income countries (per capita income between $906 and $3,595), upper income countries (between $3,596 and $11,115) and high income countries ($11,116 or more). The bank�s income classifications are key to deciding the lending category of the country concerned. �This signals that India is no more a poor country � an impression that was anyway fading away. The International Development Association may reduce aid as India is up a step on the ladder,� said Arvind Panagariya, professor of economics, Columbia University.

GDP growth is revised upward to 10% from 9.4%:

Growth rate set to blaze soon NEW DELHI: Double-digit growth is no longer the preserve of China or some small oil economies. India’s growth rate for 2006-07 is likely to be revised upwards from the current estimate of 9.4% to almost 10%. This is because growth has been more robust than estimated in both agriculture and manufacturing, according to highly-placed government sources. What would this mean for this year’s GDP growth? Since the base for comparison has become larger, one could argue that this year’s growth would be lower. But that is an arithmetic view of growth. The economic factors that drove growth to the touching distance of 10% last fiscal could sustain the momentum this year, too, to keep the growth rate above 9%, according to senior economists in the government. That’s not all. The economy’s managers can take heart. If containing inflation at a yearly average of 5.4% was a creditable achievement when growth was estimated at 9.4%, the same task seems even more creditable when it turns out that growth was 10%. Looking forward, the central bank could consider relaxing its tight grip on monetary expansion a bit, considering that real expansion could be larger than what it has been bargaining for. The 2006-07 growth rate in the agricultural sector is turning out to be higher than 2.7%, as estimated by the Central Statistical Organisation earlier. The revised growth rate in the sector could be 4% or more. Similarly, the manufacturing growth rate will be higher than the estimated 12.3%. The combined effect of these two factors could take GDP growth up in the range of 9.8-9.9%, sources said. The higher agriculture output will result mainly from an upward revision in the kharif output by about 4 million tonnes during the fiscal. The rabi output, too, has been estimated to be higher than anticipated. The GDP had expanded by 9% in 2005-06 and 7.5% in 2004-05. Per capita income has grown by 8.4% during the period under review as against 7.4% growth in the previous year, as per the CSO data. While releasing the growth figures for 2006-07, the finance minister had remarked, “The time has come to shed lingering doubts about the sustainability of high growth and scepticism about the shift to a higher growth trajectory.” If indeed the growth rate is revised to about 9.8-9.9%, the base effect could be somewhat daunting for fiscal 2007-08. The question is if a near-10% growth can be sustained on the back of a similar rate of growth the previous year. Economists say growth in 2007-08 will reflect recent attempts by the RBI and government to tighten money supply by hiking interest rates. A deliberate policy to somewhat cool down the economy may marginally decelerate the growth rate, even though we are in the middle of a new investment cycle. The chairman of prime minister’s economic advisory council C Rangarajan is fairly confident India is now experiencing an investment-driven rather than consumption-driven growth. This is the one critical factor that might deliver a consistent GDP growth of 9%-plus for another few years, officials believe.

[gorah_pindu]

P.S. guys, there is a really good programme on British TV, which will no doubt soon be available online "India" with Sanjeev Bhaskar - you wont regret watching it.

[THX_1138]

P.S. guys' date=' there is a really good programme on British TV, which will no doubt soon be available online [b']"India" with Sanjeev Bhaskar - you wont regret watching it.

need more details... is it on bbc america? is there a podcast summary? is there an online transcript...??? now dont hold out on me bro... you need to give me my fix now that i have been fed a small taste...

[gorah_pindu]

Im not sure - but im willing to bet someone will create a torrent for it :-)

[Zooter]

India moves UP to a low income country. :hysterical: You know, ... ... I'm just as pround to be an Indian as the next comrade, but ... ... this one's just plain funny.

[gorah_pindu]

Its the group China is in - and most Indians compulsively measure their economic penis against China.

[varun]

At $1,021, the Prime Minister's Economic Advisory Council has projected that per capita income would increase over 25.58 per cent this fiscal, against $831 in 2006-07.

Low income countries (per capita income of $905 or less), lower middle-income countries (per capita income between $906 and $3,595), upper income countries (between $3,596 and $11,115) and high income countries ($11,116 or more).

Hmm, according to the above, shouldn't the title state that India enters the ranks of "lower middle-income" countries ?

[THX_1138]

Hmm' date=' according to the above, shouldn't the title state that India enters the ranks of "[b']lower middle-income" countries ?

yeah... we are already in the low income strata... we are on our way to graduate to the lower middle income strata.

[gorah_pindu]

Oooops, left the middle bit out :-)

[Guest dada_rocks]

Its the group China is in - and most Indians compulsively measure their economic penis against China.

:hysterical: