ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Behind the Surge

The Central Statistical Organisation’s quick estimates of national accounts statistics (NAS) for 2005-06 show a remarkable increase in domestic saving and capital formation rates. For close to a decade up to 2001-02, saving and investment rates had slipped from the peak attained in the mid-1990s and stagnated, as per the old data series, at around 24 per cent and 26 per cent of the gross domestic product (GDP) at market prices, respectively.

The Central Statistical Organisation’s quick estimates of national accounts statistics (NAS) for 2005-06 show a remarkable increase in domestic saving and capital formation rates. For close to a decade up to 2001-02, saving and investment rates had slipped from the peak attained in the mid-1990s and stagnated, as per the old data series, at around 24 per cent and 26 per cent of the gross domestic product (GDP) at market prices, respectively. Even after the national accounts series were revised, which gave a statistical boost to the estimates of savings and investment, the saving rate fell from 24.8 per cent in 1999-2000 to 23.5 per cent in 2001-02 and the investment rate dropped rather sharply from 25.9 per cent to 22.9 per cent during the period.

But since 2001-02 there has been a sea change in the scenario. The domestic saving rate has jumped from 23.5 per cent in 2001-02 to 32.4 per cent in 2005-06 and likewise, the investment rate from 22.9 per cent to 33.8 per cent. And now, the chairman of the prime minister’s economic advisory council, C Rangarajan, has projected a further sharp rise in the saving rate to 35 per cent during 2006-07. Considering that the current account deficit, the counterpart of net capital inflows, would in all probability rise from 1.4 per cent in 2005-06 to 2 per cent of GDP, the investment rate in the current fiscal is very likely to be of the order of 37 per cent.

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