The Indian economy grew at a modest 6.9 per cent in 2011-12, compared with 8.4 per cent in 2010-11. While service sector growth has maintained its momentum in 2011-12, there has been sharp growth deceleration in agricultural and industry.

How pervasive has been the growth slowdown across States and different sectors at the State level? One way to form an idea about the slowdown is to look at the 2011-12 growth figures at the state level.

While GDP reflects the output at the all-India level, the gross state domestic product (GSDP) represents output at the State level. India has, in all, 35 regions comprising 28 States, six Union Territories and the National Capital Territory, New Delhi. Recently, a number of States came out with their advance estimates of GSDP for 2011-12.

We have considered 21 States for which GSDP data for 2011-12 is available. These 21 States account for 95 per cent of the GDP in 201-12, hence capturing developments at state level that ultimately affect the national picture on the growth front.

What do the GSDP numbers in these 21 States suggest?

First, 14 out of 21 States considered witnessed a fall in the GSDP growth rates in 2011-12 compared with 2010-11.

Second, Bihar has recorded the highest GSDP growth (13.1 per cent) in 2011-12. Notwithstanding the high growth, it has witnessed fall from still higher levels of growth (14.8 per cent) in 2010-11.

Third, Rajasthan has recorded not only the lowest GSDP growth in 2011-12 but also posted the maximum fall in GSDP growth as compared with 2010-11. Fourth, amongst all States where growth has decelerated, Chhattisgarh has witnessed the minimum fall in GSDP growth in 2011-12.

Brighter side

Fifth, on the brighter side of the picture, Uttaranchal, Bihar, Delhi, Jammu and Kashmir, Goa, Madhya Pradesh and Jharkhand have witnessed growth acceleration. Further, the last three States in the list have witnessed higher growth across all the three sectors in 2011-12. Sixth, seen from a different perspective, growth rates for services, industry and agriculture have fallen in 14, 8 and 15 States, respectively, in 2011-12, compared with their growth in 2010-11.

Seventh, in five out of these 14 States, viz, Bihar, Haryana, Rajasthan, Andhra Pradesh, Tamil Nadu, and Uttar Pradesh, growth deceleration is seen across all the three sectors. Another five States, viz, Orissa, Punjab, Karnataka, Gujarat and Maharashtra have witnessed growth deceleration not only in the GSDP but in two out of three sectors.

Eighth, the services sector growth has maintained a momentum at the all-India level despite 15 States registering a dip in growth in this sector. The decline in the 15 States has been compensated by the rise in growth in six States. Due to the decline in growth rates, which has been significant in States such as Punjab and Orissa, the services sector accounts for a much smaller share in SDP as compared with the national average.

On the other hand, in five out of eight States which experienced a decline in industrial growth, the extent of decline has been more than 2 per cent points. Thus, the sharp decline in industrial growth at the all-India level. Ninth, when the States are grouped into regions, we find the eastern and the northern region witnessed an increase and the western, southern and the central regions experienced a decline in the GSDP growth rates 2011-12 compared with 2010-11.

While the southern and the western regions contribute more than 50 per cent of the growth in GDP, the other three regions account for around 15 per cent of the all-India GDP growth. Thus, it is the slowdown in the GSDP growth in the southern and western regions that has contributed to the overall slowdown in growth.

Tenth, the share of a particular sector and its growth rates when considered together, give an idea about the contribution of a that sector to overall growth during a particular time period. The Service sector contributed 80 per cent of the GDP growth followed by 15 per cent by Industry and 5 per cent by agriculture in 2011-12.

This is much in contrast to the scenario in 2010-11 when the contributions of agriculture, industry and services sectors were 12, 23 and 65 per cent, respectively.

Agricultural growth

The broad-based fall in agricultural growth seems to be an overestimation, as food grain production at the all-India level appears to have been a record high, crossing 250 million tonnes.

The GSDP growth numbers reported here are based on advance estimates, and one may see significant revision in agricultural growth in the final estimates, which is likely to give an upward push to the advance estimates of CSO on GDP numbers. The advance estimates of GDP put out by CSO did not capture the small-scale industries (SSI) data. The inclusion of SSI data could lend an upward bias to the GDP growth when quick estimates are released.

Caution has been sounded by many international climate watch organisations about the high chances of India not receiving a normal monsoon in 2012-13. If these predictions come true, even partially, it will affect agriculture growth prospects in a number of States in 2012-13 where irrigation is mostly rain-fed.

The Reserve Bank has cut the policy rates by 50 bps after raising it 13 times in the last two years. If the easing of monetary policy is complemented by supporting fiscal policy and structural reforms, industry will attain higher growth rates in 2012-13, which will make the overall growth numbers look much better.

(The author teaches Economics at the Xavier Institute of Management, Bhubaneswar. Views are personal.)

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