Page 14 - DECO201_MACRO_ECONOMICS_ENGLISH

Unit 1: Introduction to Macro Economics

Notes

Case Study Macro Economic Scene in India

he growth of the Indian economy is expected to be 5-9 per cent in 1999-2000. There
has been a sharp upturn in GDP growth in 1998-99, which reversed the deceleration
Tin growth seen in 1997-98. GDP growth accelerated to 6.8 per cent in 1998-99 from
5 per cent in 1997-98. The primary supply side factor for the recovery was agriculture. On
the demand side, private consumption recovered in 1998-99 from its slump in 1997-98,
with real consumption growth doubling from 2.6 per cent in 1997-98 to 5.1 per cent in
1998-99.
Gross domestic saving declined sharply in 1998-99 to 22.3 per cent of GDP. Though
household saving increased as a proportion of GDP, the overall private saving rate declined
by 1 per cent of GDP. The decline in saving rate of the government and households is a
counterpart of the higher consumption growth during 1998-99. Though in the short run,
growth in government consumption may have had a positive effect on aggregate recovery,
government dis-saving (mainly reflecting high revenue deficits) will have to be reduced
if aggregate investment and growth of the economy is to increase.

GDP GROWTH (In per cent) 1993-94 prices AGRICULTURAL PRODUCTION (Growth in per cent)
** Quick estimates * Provisional
7.5 * Advance estimates
6.9** 9.3
5.9* 7.4
5.0

96-97 97-98 98-99 99-2000
-2.2*
96-97 97-98 98-99 99-2000 -6.1
INDUSTRIAL PRODUCTION (Growth in per cent) INFLATION (Annual point-to-point inflation in %)
* April-Dec * As on Jan 29, 2000
6.6 ** As in Dec 1999
6.2
5.6
10.0
4.0
6.9
2.9*

0.5**
96-97 97-98 98-99 99-2000
96-97 97-98 98-99 99-2000 Based on WPI Based on CPI

MONEY SUPPLY (M3) (Growth in per cent) FOREIGN TRADE * Apr-Dec
* As on Jan 14, 2000
39.1
18.4
18.0
34.5*
16.6* 33.5
16.2

27.4*
96-97 97-98 98-99 99-2000
96-97 97-98 98-99 99-2000 Imports Exports

Contd...

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