For the last few years the export growth and growth of IT & ITES has been steadily around 30%. The combined contribution of these to the overall GDP has been increasing from just above 10% few years back to nearly 20% now. If you breakup the economy into export and non-export, then you will see a surprising result. The growth rate of the rest of the economy has remained at around 5%. Because of the significantly faster growth in export, the relative share of export is increasing. As a result, the overall GDP growth has been accelerating without any change in the growth rate of export or rest of economy!
My calculation shows that GDP growth for 2006-07 is likely to be around 9.5%! Also, by 2009 we would have reached a double digit growth. I suspect that India will overtake China in GDP growth rate in 2009 for the following reasons.
- China's growth is also fueled by export, but its share of export to total GDP is close to 50%
- China will find it difficult to sustain the export growth rate
- The Olympics to be held in China in 2008 will a contributing factor to the growth
- So, in 2009 that factor will not be there
- On the other hand India is hosting commonwealth games in 2010
- The investment in infrastructure would have reached its peak in 2009