Impact of the previous stimulus packages

When asked whether declining manufacturing output calls
for another stimulus package from the Government, the Prime
Minister's Economic Advisory Council Chairman, Suresh
Tendulkar, said the Budget is expected to address growth
concerns.

Crisil Principal Economist D K Joshi said the Government
may first see how the impact of the previous stimulus packages
pan out.

Finance Minister Pranab Mukherjee had said that bringing
the economy to a high growth path is the priority of the
Government.

Chief Statistician Pronab Sen said he did not expect
another stimulus package right now.

However, compared to the previous fiscal, economic growth
did exhibit a slowdown, triggered by sluggish manufacturing
due to slackening demand. In fact, sharp decline in demand
overseas has led to shrinking exports since October.

For the entire fiscal, manufacturing grew by just 2.4
per cent against 8.2 per cent in 2007-08.

Agriculture posted 1.6 per cent growth in 2008-09 against
4.9 per cent in 2007-08, even as it bettered performance in
the fourth quarter of the last fiscal to 2.7 per cent against
2.2 per cent in the same period in the previous fiscal.

Only mining and quarrying, and community, social and
personal services showed improved performance in 2008-09 over
the previous fiscal.

Community, social and personal services grew 13.1 per
cent in 2008-09 from 6.8 per cent in the previous fiscal,
driven by the pay hikes of government employees.

Mining and quarrying was up by 3.6 per cent from 3.3 per
cent.

Electricity, gas and water supply as well as other
services sectors grew less promisingly in 2008-09, at 3.4 per
cent, from 5.3 per cent in 2007-08.

Construction growth was 7.2 per cent in the last fiscal
against 10.1 per cent in 2007-08, though it posted the same
growth rate in the fourth quarter at 6.8 per cent.

The Central Statistical Organisation had pegged GDP
growth at 7.1 per cent for 2008-09 in its advance estimates.

An official release said, "The downward revision in the
GDP growth rate is mainly on account of lower performance in
almost all the sectors excluding construction and community,
social and personal services than anticipated."

The Indian economy grew 7.8 per cent in the first
quarter, 7.7 per cent in the second, and 5.8 per cent in the
next two quarters each of 2008-09. However, the figures for
the first three quarters are revised.

Goldman Sachs said fourth-quarter GDP figures are higher
than the market's and its own expectations.

It said Government consumption, which grew 22 per cent
year-on-year, was the largest contributor to the boost in
growth.

D K Joshi also said high government spending has resulted
in good GDP numbers.

Given the low inflation figure at 0.61 per cent, will the
RBI come out with more monetary stimulus to boost
manufacturing? Experts are divided on the issue.

While Joshi said the RBI is expected to continue with its
soft monetary stance and may cut the repo rate by 50 basis
points, Tendulkar said a cut in policy rates by the central
bank will not help the economy much.

Joshi expects India's economy to grow between 5.5 and 6
per cent in the current fiscal and Goldman Sachs saw upside
risks to its GDP estimates of 5.8 per cent.

Goldman Sachs also said, "Going forward, we expect
activity to pick up in the second half of 2009-10." PTI IND
PMR