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July 01, 2005

The South Asian Tiger

India's economic growth, from the FT:

FT.com / World / Asia-Pacific - Indian GDP boosted by strong manufacturing: By Jo Johnson in New Delhi: India’s economy surged by 7 per cent in the fourth quarter of 2004-05, lifting the full-year growth to the 6.9 per cent predicted by the government, as strong manufacturing and services output compensated for a weak performance by the agricultural sector.... Manufacturing grew at 8.6 percent in the January-March quarter.... Farm sector output was up 1.8 percent in January-March... well below the 4 per cent targetted in India’s latest five-year economic plan....

Montek Singh Ahluwaliah, deputy-chairman of India’s Planning Commission, on Thursday lamented that agriculture growth had “run out of steam” since the 1990s and called for greater investment in irrigation and moisture retention infrastructure. In many of India’s states, water charges cover only a fraction of operational and maintenance cost, leading to substantial underinvestment in the irrigation network and shortages caused by wasteful consumption by inefficient farmers. “Nobody is actually talking about user charges covering capital cost,” Mr Ahluwaliah said. “But there is a strong case for user charges covering operations and maintenance cost."...

NCAER says 13 per cent of India’s population will have an annual income of £2,439-£12,500 by 2009-10, compared with 3 per cent in 1995-96. The improved competitiveness of Indian industry, particularly the manufacturing sector, is another reason for the decoupling of industrial production from agricultural output. Exports grew 21.4 per cent in 2003-04 and 24.4 per cent last year.

Soaring sales of motorcycles in rural areas also illustrate growing availability of consumer finance in villages has smoothed consumption in weaker years and lessened the relationship between farm incomes and rural expenditure on manufactured goods.

Posted by DeLong at July 1, 2005 02:04 PM