The Indian Economy – Gross Domestic Product Literature Review

The Indian Economy has seen major Macro changes in:

  1. Gross Domestic Product:

In the industrial cycle, uptrend and the strong fundamentals are driving the Indian economy. In the year 2005-06, the third successive year Indian economy is controlled a strong growth momentum with the real GDP and the accelerating growth is 8.4% for the year 2005-06. The growth in the double digit is recorded by the service sector to donate almost three-fourths of the incremental GDP. A reliable increase in the investment rate of domestic from 23.0% of GDP in the tear 2001-2002 to 30.1% in the year 2004-2005 encouraged a high credit growth observed during the past few years.

In the financial year 2006-2007, services sector account for major 55% of India GDP followed by 25% in the industrial sector and 20% in the agriculture sector.

FY07 Vs Q2FY06, in the GDP components growth rates are as follows:

Agriculture: 1.7%

Service: 10.7

Industry: 10.5%

FDI Confidence Index:

In the every sector of Indian economy large capital has been utilized which has been expanded by the relaxation of foreign direct investment rules. The efforts are made by the Government in liberalization the norms and guidelines for the investment through FDI. In the FDI Confidence Index,Indiastands in the second place among all the countries in the world because of the efforts put by the Indian Government.


In India, since the pass-on of increase in international crude price is continued to be incomplete, the inflation remained hugely helpful because of promoted nature of prices of oil and motivated nature of growth. Inflation of WPI is raised up to 5.45% for the week ended on 18th November 2006 as the same range is continued of 4.0-5.0% in the past. RBI has given warning continuously that the main target is to control the inflation. In the present economy money provided is increased by 18.7% approximately till 10th of November 2006. Towards RBI efforts made towards the inflation to get a best range of 5.0-5.5%   , this will cause an important threat. 

Gross Fiscal Deficit: 

In the year 2005-2006 the ratio of the Goss Fiscal Deficit (GFD) to GDF ration was at 4.1 % as opposite to the estimated budget which is of 4.3%. In the year 2006 from April to November, Fiscal and revenue deficit are broadened to 72.8% of BE and 99.7% of BE Vs 74.7% of BE and 91.5% of BE respectively in the year 2005 from April to November. Comparing to the last month present levels are very high fiscal deficit of 58.6% of BE and 79.4% of BE for the revenue deficit. The development in the GFD make possible by the expended capital which is declined and the accessibility of disinvestments proceeds. In 2005 to 2006 GDP even though the revenue deficit is less in absolute terms will be continued at 2.7 % of the budgeted level.

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