ANNUAL REPORT 2007-08
PART I POLICIES AND PROGRAMMES
A. GENERAL ECONOMIC ENVIRONMENT
The Infrastructure sector which gained momentum during 2006- 07 decelerated significantly during 2007-08. The sector, with a weight of 26.7 per cent in IIP, recorded a growth of 5.6 per cent in 2007-08 as compared with 9.3 per cent during 2006- 07. All the segments of the infrastructure sector, barring coal,
recorded decelerated growth during 2007-08. The micro and small enterprises (MSE) continues to play an important role in India’s industrial growth and exports, besides providing substantial employment opportunities. In the recent years, the MSE sector has consistently registered higher growth in comparison with the overall industrial growth. The MSE sector contributed about 40 per cent to the gross industrial value added in the economy and accounted for 47 per cent of the total manufactured exports.
According to the revised estimates released by the Central Statistical Organization (CSO), real GDP growth originated for the services sector moderated from 11.2 per cent in 2006- 07 to 10.7 per cent in 2007-08 due to deceleration in ‘financing, insurance, real estate and business services’ and ‘construction’ sub-sectors. ‘Financing, insurance, real estate and business services’ recorded a growth of 11.8 per cent in 2007-08 compared to 13.9 per cent in 2006-07. However, the sector’s share in real GDP has marginally increased from 14.3 per cent in 2006-07 to 14.7 per cent in 2007-08. Latest estimates on gross domestic product emanating from sub- sector are available for 2006-07. As per the estimates, banking and insurance constituted 6.68 per cent of real GDP in 2006- 07 as against 6.12 per cent in 2005-06. This sub-sector has recorded a growth of 19.71 per cent in 2006-07. While ‘banking’ showed a growth of 17 per cent, insurance recorded a growth of 34.5 per cent in 2006-07 over 2005-06. The share of insurance sector in real GDP increased to 1.1 per cent in 2006-07 from 0.9 per cent in 2005-06.
Saving and Capital Formation
The CSO released estimates for GDP at the economy level and also at sectoral level for 2007-08. But estimates of saving and capital formation are available with lag of one year; as such, the latest estimates released by CSO relates to 2006- 07. However, the gross financial savings of the household sector, as estimated by Reserve Bank of India (RBI), are available for 2007-08. As such the review pertains to savings and capital formation for 2006-07 and gross financial assets for 2007-08.