The revised estimates on gross domestic product show that the Indian economy grew at 9% in 2007-08. Though it was slower than 9.6% recorded in the preceding year, it is undoubtedly very impressive.
But the disaggregate story reads different. It shows that deceleration in manufacturing has only worsened with every quarter in the last fiscal year. In the fourth quarter, it had dropped to 5.8%, the lowest in almost six years.
It also shows that the main drivers of growth, private final consumption expenditure, or PFCE, and investment, are seeing a steady decline in their share in national income. While, the share of PFCE dropped sharply from 59.8% in the first quarter to 53.4% in the fourth quarter, that of investment dropped from 32% to 31.6%.
The slack was made up largely by a step-up in government consumption, that rose from 10.3% to 11.2%— which reflects deterioration in the fiscal deficit.
So, regardless of what the spin doctors claim, we have to brace for more bad news.