Economic growth, at times euphoric, is expected in India for the period 2006-2007. The better performance in the services sector and manufacturing industries will act as the main parameters for maintaining the economic growth, what the evidences tell.
The real GDP growth in the country is calculated in the range of 7.5-8.0 per cent during the year 2006-07. Presently the Indian Economy is coming across various risks both in the domestic scenario as well as in the international scenario. The global economy suffers from the problem of record level of international crude oil prices, overall inflationary pressures and rising international interest rates. In the same direction the Indian Economy also suffers from the problem of monsoon, infrastructure bottlenecks, and fiscal imbalances.
Though there are a larger number of ongoing imbalances continuing over the world, still to what extent different sectors in the Indian Economy have responded in the period of 2006-07. Agriculture Sector:
Let us analyze Agriculture once considered, as the "Back bone of Indian Economy" is justified to what extent for the Indian Economy today. As to statistics, the actual growth in the agricultural sector during the first four years of the Tenth Five Year Plan was two per cent per annum on an average basis. The slower rate of economic growth in the country is being marked due to stagnation in domestic production in the commodities such as wheat, sugar and pulses.
The declining production in the agricultural sector is generally marked due to some constraints like infrastructure bottlenecks, particularly in regard to irrigation facilities; continue to impede speedy adoption of improved technology.
However after analyzing the present scenario on the Indian agriculture, in terms of its success story and challenges ahead it's the time for justifying "Indian Agriculture as the backbone of Indian Economy".
All the Planners, thinkers, and economists tell about services sector, which has the highest percentage share in country's Gross Domestic Product. But to what extent this fast rising services sector is able enough to solve the problem of inequality, poverty and mal nutrition in the Indian Economy. Really it fails and it is the agriculture, which can solve the above problems.
Indian Industries have entered in to an atmosphere of higher competition in the era of globalization.
The resilience shown by the industrial sector against the hardening of global oil prices is reflective of inherent strengths and capabilities that the industrial sector has built up over the years since the initiation of economic reforms in the country.
Besides higher levels of investment, issues of governance and management including policies relating to appropriate pricing and user charges would need to be addressed to achieve satisfactory results. Given the rising international crude oil prices and stagnant domestic crude oil production, an integrated approach to efficient use of energy - both oil and non-oil energy resources - assumes importance.
India's services sector has grown very fast as it holds a larger portion of young peoples. The educated young masses in India have brought tremendous success for the country in the recent years. The services sector in the country has benefited from the availability of vast skilled labour. In the coming years, India is expected to benefit further from the demographic dividend emanating from a higher proportion of younger population. For this demographic dividend to be reaped fully, improvements in education, skills, health and governance would be needed so that the Indian labour force is globally competitive. There is need to improve the availability of educational facilities at all levels - primary, secondary and tertiary - to equip the labour with the necessary skills to maintain current competitive advantage.
The external sector of the Indian economy is also performing better. India is in a path to capture 1% of the global trade in the near future. Merchandise export growth of 24 per cent per annum, on average, in the past four years points to the growing competitiveness of Indian manufacturing. Improvements in infrastructure assume critical importance for maintaining and improving our competitiveness as also encouraging investment in export production and sustaining the pace of export growth in the longer term.
For the full potential of earnings from exports of services to be realised, issues relating to skill enhancement and quality of education assume greater importance. Demand for education, especially higher education, is expected to grow immensely in the coming years in view of the demand emanating from knowledge intensive nature of the services sector as well as demands from the manufacturing sector.