19-Growth and Volatility of Indian Economy.pdf

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GROWTH AND VOLATILITY OF INDIAN ECONOMY

Ratan kumar Ghosal

Dept of Commerce, University of Calcutta

JEL Classication Nos: E01; O47; R11.

This study examines the nature of growth and volatility both at the aggregate and at

the sectoral level experienced by the economy, since independence. It is found that

the post reform period has witnessed relatively faster rates of growth rates of GDP

and also of the NSDP (at the state level) including its sectoral composition excepting

for agricultural sector and also a sharp reduction in the cross state volatility in the

growth rate of NSDP as compared to pre-reform period. The cusum test reveals that

the structural break in the behavior of GDP and it sectoral composition has actually

occurred in various years since 1997. Further the falling pattern of volatilities in

the behavior of GDP and its sectoral composition have started around the mid

sixties.

I. INTRODUCTION

One cannot deny the fact that Indian Economy since independence has gradually been moving

towards the achievements of faster rate of growth of GDP after surpassing the long term (1950

75) persistence of Hindu Growth rate. In fact, it has been found that our economy continued

to achieve the trajectory of high growth between 1975 and 1990, which eventuay cuminated

in the crisis of 1990 caused by high fiscal deficit vis--vis the current account deficit. Obviously

the fall out of the crisis was the switching of the economy from plan to market. Of course during

the post reform period and especiay during the first five years of new miennium, the growth

rate of GDP has reached such a conspicuous eve (i.e. 8% - 9% per annum) that India has been

recognized as one of the fastest growing economies in the world and India and China togetherhave been treated as an engine of growth of the world economy. Interestingly during the period

of haf a century, the economy has aso experienced remarkabe structura transformation in

respect of composition of GDP. However, the growth of GDP seems to have not reveaed a

smooth upward trend over a long period. Rather the growth of economy has been accompanied

by tremendous volatility and instability not only at the national level but at the cross state

eve aso. In parae, it has aso been found that in course of structura transformation of our

economy the service sector enjoyed a comparative advantage in playing a leading role towards

the achievements of remarkable growth rate such that the service sector driven growth has been

christened as service sector revoution in our economy (Rakshit, 2007, 2009, Bhaduri, 2008).

Given this Macroeconomic scenario of Indian Economy one has to probe deeper into the nature of

the growth and its sectoral composition both at national and cross state level since independence.

There is a common perception that the overall growth trajectory reveals a divergent pattern.

Further since our economy has experienced a remarkabe structura transformation, one has

to have some idea about the period exacty when this structura transformation has occurred.

Moreover it is imperative to examine the nature of the structura break experienced by a the

three major sectors of our economy.

The Journa of income and weath, Vo. 31, No. 2, June-December, 2009


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14 THE JOURNAL OF INCOME AND WEALTH

Under this backdrop this study examines the nature of growth and voatiity both at the

aggregative and as we as the sectora eve experienced by the economy since independence.

Further, we aso examine whether the conventiona perception of divergence hods both at the

aggregative as well as sectoral level during the pre and post reform period. In addition to this

attempt has been made to determine the exact periodwhen the structural transformation not

only at the aggregative level but also at the sectoral level occurred in our economy. This paperis organized as follows. Section II gives data and methodology used in this study; Section

III highlights the nature of the growth and its sectoral composition both at the national and

cross state eve; section IV examine the nature of voatiity of growth of GDP and its sectora

composition; Section V presents an anaysis of the structura break of GDP and its sectora

composition; Finay section VI gives the concuding observations.

II. Data and Methodology.

This paper is excusivey based on secondary data avaiabe from EPW Research Foundation,

Various pubications of CSO and Reserve Bank of India. To convert the series of data on GDP

and SDP and its sectoral composition at constant prices we have used implicit GDP as well as

SDP deflators. For computing annual growth rates of GDP and SDP across states we have usedthe foowing exponentia equation:

Yn= Y0 (1 + r)n

Where, Yn= GDP/SDP at the terminal period.

Y0=GDP/SDP at the base period.

r= Rate of Growth.

n= Number of Years

To examine the nature of growth of GDP and its sectora composition both at nationa and

cross state level we have divided the whole of the period of our study into several phases and

computed the phase wise growth rates and voatiities. Further to examine the nature of voatiity

of growth of GDP, SDP and their sectora compositions we have used the conventiona measure

i.e. the Coefficient of Variation (C.V).

For determining the period of structural change of GDP and its sectoral composition we

have appied a conventiona measure i.e. the Cusum Test (Greene, 2006).

III. GROWTH PERFORMANCE OF OUR ECONOMY AND ITS STATES.

The dynamic behavior of the level of GDP and its sectoral composition reveal more or less an

increasing trend over the period between 1950 51 and 2008 09. Figure 1 beow gives an

overview of this behavior. Interestingly because of the historical dominance of the primary

sector in our economy, contribution of agricuture to GDP has been found to be much higherthan that of industry or secondary sector up to 2005 06, beyond which the absoute share

of industria sector in the GDP has surpassed that of the primary sector. Astonishingy, the

absolute share of the service sector in GDP lie between that of the two other sectors up to 1971

72 such that it was higher than the contribution of industry but ower than that of agricuture.

It is surprising to note that since the mid 1980s, the service sector continued to experience a


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GROWTH AND VOlATIlITY OF INDIAN ECONOMY 15

tremendous continuous increase in its absolute share in our real GDP. Obviously it is plausible

to say that Indian experience of deveopment goes against conventiona theoretica perception

of deveopment (lewis, 1954, Harris & Todaro, 1970). This can safey be ascribed to the fauty

panning strategy, which has faied to bring about the mobiisation of resources from primary

to secondary and then to the service sector. As a result we find an almost gloomy picture of

industrialization process of our economy.

The tabe: 1gives us a clear overview of the relative shares of the three major sectors in

GDP which would also give us an idea about the nature of the structural transformation of our

economy since independence.

Figure 1

Components of GDP in India

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

1940 1960 1980 2000 2020

Year

Agriculture

and AlliedActivities

Industry

Services

GDP

GDP,Agricultureandallied

activities,Industry,Services

Tabe:1

Sectoral Contribution to GDP (at factor cost at constant 1999 2000 Prices)

Period Agricultural and Allied Activities Industry Services

1950 -1951 55.28 10.65 34.071960 -1961 50.81 13.18 36.01

1970 -1971 44.31 15.46 40.23

1980 -1981 37.92 17.45 44.63

1990 -1991 31.37 19.80 48.83

1999 - 2000 24.99 19.60 55.40

2008 - 2009 16.95 18.50 64.55

Source: Computed from EPW Research Foundation Data base.

It is evident that the agricutura sector has experienced a steady fa in its reative

contribution to GDP from 55.28% in 1950-51 to 31.37% in 1990-91 and further to 16.95%

in 2008-09 foowing the usua process of deveopment. Conversey, the industria sector hasreveaed a mid increasing trend in its reative contribution to GDP from 10.65% in 1950-51 to

19.8% in 1990-91 foowed by a decining trend up to 2008-09, which obviousy goes against

the conventiona theoretica wisdom of deveopment. Now, if one ooks at the service sector then

it is really surprising to note that there has been a tremendous increase in its relative contribution


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from 34.07% in 1950-51 to 48.83% in 1990-91 and further to 64.55% in 2008-09. Surprisingy

about 70% of this contribution is generated from informa service sector (Bhaduri, 2008).

Now if we ook at the dynamics of the sectora contributions, the tabe -2 ceary brings out

the fact that the period foowing the economic reforms (1991-2009) has given a boost to the

service sector such that its reative contribution to our GDP has increased by 32.19 percentagepoint. Even in the first decade of the new millennium the relative contribution of the service

sector to GDP has witnessed a higher rate of growth by 15.02-percentage point. Surprisingy

the relative contribution of the agricultural sector to GDP has also witnessed a remarkable fall

by 45.96-percentage point during the post reform period. So it is pausibe to concude that

the reform process has made a major contribution towards bringing about a radical structural

transformation of our economy so that we have been abe to experience a service sector

revolution. A detailed analysis of the demand and supply side factors which are responsible for

the service sector revoution has been made by Rakshit (2007, 2008).

Tabe:2

Percentage point change in relative contribution of the components of GDP of India

Period Agrl & allied Industry Services

1951-1961 -8.08611 23.75587 5.69416

1961-1971 -12.7928 17.29894 11.71897

1971-1981 -14.4211 12.87193 10.93711

1981-1991 -17.2732 13.46705 9.41071

1991-2000 -20.3379 -1.0101 13.45484

2001-2009 -29.0498 -7.45373 15.02138

1991-2009 -45.9675 -6.56566 32.19332

Now as far as the annua growth rate of rea GDP and its sectora composition are concerned

we have computed decadal growth rates also for the period preceding the reform process and

for the post reform period. The computed annual growth rates of GDP and that of these major

sectors are given in tabe: 3

Tabe: 3Growth Rate of GDP and its components in India

Period GDP Agrl & allied Industry Services

1951-1961 3.901 3.029 6.138 4.478

1961-1971 3.724 2.313 5.396 4.879

1951-1971 7.77 5.411 11.865 9.575

1971-1981 3.088 1.495 4.34 4.165

1981-1991 5.375 3.395 6.716 6.327

1951-1991 5.327 3.257 6.946 6.615

1991-2000 5.127 2.766 5.023 6.463

2001-2009 6.002 2.426 5.188 7.495

1991-2009 11.913 5.233 11.157 15.079

1951-2009 4.768 2.654 5.771 5.928

We have actuay a mixed picture on the decada annua growth rates of GDP and the three

major sectors. Whie the annua growth rate of GDP hovers between 3.9% and 6.0%, that

of agricutura sector ies between 1.5% and 3.03% per annum over the period of our study.

Conversey the decada annua growth rates of industry hovers between 3.34% and 6.95% and

that of service sector ies between 4.123% and 7.5% over the six decades. But if we anayze


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growth rates of GDP and its major sectors during the pre and post reform period, then we find a

tremendous increase in the growth rates during the post reform period (1991-2009) as compared

with that in the pre reform period (1951-1991). The annua growth rate of GDP at factor cost was

5.33% foowed by agricutura growth rate of 3.26% and the industry and service sector growth

rates of 6.95% and 6.62% respectivey. But during the post reform period the service sector has

experienced a sharp increase in its annua growth rates to 15.08%, foowed by industry (11.16%)and agricuture 5.23% respectivey. The poor base eve of GDP and its sectora composition in

1991 might have vitiated the computed growth rate. However, one cannot deny the fact that the

reform process has given a boost to the economy, the outcome of which has been refected in

terms of the break through in service sector growth during the post reform period.

Cross state performance of growth of NSDP and its components

We have aso computed the growth rates of NSDP (at factor cost) and its sectora compositions

across the states for each decade and aso for the pre and post reforms period, the estimates of

which are given in the appendix tabes 1-4. The decada annua growth rates NSDP revea a

mixed picture over the period and it aso reveas a tremendous inter-state variabiity measured

in terms of the time profile of the values of coefficient of variation. Similarly the growthperformance between the pre and post reform period also reveals a sharp contrasting scenario

across the states. The appendix tabe 1 ceary reveas that the states excepting Bihar, UP, MP,

AP, and Rajasthan have achieved an increasing trend in their rates of growth of NSDP during

the five decades since 1961.In fact the above states have registered ower rates of growth of their

NSDP during the first decade of economic reform. It seems these states coud not initiay adjust

to reap the benefit of the market. Further the withdrawal of the public sector from development

process as an impication of the IMF-Word bank dictated poicy of economic reform seems

party to be the expanation of the fa in growth rates of NSDP of the states.

Another striking feature of the growth rates of NSDP as is discernabe from the Appendix

table- 1 is that during the post reform period almost all the states have registered very high

growth rates in varying degrees as compared to the growth rates achieved during the pre-reformperiod and aso to the overa period of our study. So, it is pausibe to concude that the reform

process has given a tremendous boost to the growth performance of all the states such that the

states have been able to reap the benefits of the market in varying degrees. It is no less note

worthy that the cross state variability in the growth rates of the states as is revealed by the time

profie of the C.Vs which were very high during the sixties and the seventies and have graduay

reduced overtime. Surprisingly the in the post reform period this has witnessed sharp reduction

in the cross state voatiity in the growth rate of NSDP aso. So, one can say that the reform

process might have helped reducing the inter-state disparity in economic growth.

As far as the growth rates of the major three sectors are concerned the Appendix Tabe 2

gives a mixed picture on the growth experienced by the states in their agricuture and aied

sector. No definite concusion on the performance of decada as we as pre and post reformagricutura growth can be drawn. In fact, the states with high degree of appication of new seed

fertiizer technoogy during sixties have achieved higher growth rates in agricuture, but the

states with delayed application of new technology have achieved higher growth rates during

1970s and 1980s. However, there has been suggishness in the growth rates of agricuture in

almost in all the states during the 1990s coupled with a bit improvement in the first decades of


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the new miennium. So, one can pausiby concude that iberaization of agricutura sector

after the formation of WTO has not produced favorabe impact on the growth of agricuture

across the states of India. The time profie of C.V aso reveas that the cross state variabiity

in the growth rates of agriculture was very high during the pre-reform period and it has fallen

during post reform period albeit it is still very high. On the other hand as far as the industrial

sector is concerned the Appendix Tabe 3 ceary brings out the fact that a the states haveachieved growth of NSDP originating from industry in varying degrees with some states ike AP,

HP, Gujarat, Karnataka etc. achieving high growth rates and some achieving moderate growth

rates and very few states ike WB Orissa, achieving ower growth rates. We aso find that the

first decades of reform has registered sluggishness in the growth rates of industrial production

across a the states excepting Assam Gujarat and to some extent WB. However, it is worth

noting that our economy has experienced industria stagnation during 1965-1979. The estimates

of industria growth rates during pre and post reform period aso revea (see appendix Tabe 3)

that some states have performed better during the post reform period and some have performed

better during the entire pre-reform period. It seems to be the outcome of the variability in the

access to market economy on the part of the states. The time profie of C.V of the growth rates

of NSDP originating from the industria sector revea a very striking feature that the cross-statevariability in the growth rates of the industrial; sector have been increased remarkably during

the post reform period.

On the other hand as far as the cross-state growth of service sector in concerned Appendix

Tabe 4 ceary brings out the fact that amost a the states have experienced tremendous

increase in the growth of service sector in varying degrees. Surprisingly the post reform period

has witnessed a tremendous break through in the growth rates of the service sector in almost

all the states as compared to their growth performance of service sector during the pre-reform

period.

It is further no less noteworthy that the cross state variability in the growth rates of service

sector as is evident from the time profie of C.V has decined remarkaby during the post reform

period. So it is plausible to conclude that the reform process in India has not only helped bringabout the service sector revoution that we have experienced but aso reducing inter-state

disparity in the growth rates of service sector tremendously. Further one can also say that the

reform process has led to the faster structural transforming our economy in favour of the service

sector through the increase in the service intensity in production and the demand for and supply

of services.

IV. NATURE OF STRUCTURAL CHANGE AND VOLATILITY OF INDIAN ECONOMY

It is we known that any economy whether it is a mixed or a capitaistic economy is aways subject

to the voatiity of its rea GDP, empoyment, price eve etc caused not ony by the endogenous

disturbances created out of the imbalances between the aggregate demand and supply of goods

and services but aso by the exogenous shocks generated from out side the economy and the erraticnatura caamities etc. The trajectory of the growth experience of our economy not ony at the

national level but at the cross-state level also reveals a high degree of volatilities. In this section we

examine the nature of the voatiities in the eve of rea GDP and the rea NSDP at the cross-state

eve for a the three major sectors in terms of the computed cross-time C.Vs and try to expain the

proximate factors behind the same. The Tabe 4 gives the vaues of C.V of GDP and its sectora


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composition for the three phases. It is interesting to note that the volatility of GDP over the entire

period of our study was very high (C.V. =82.95%) but it was reativey much ower during the pre

reform period (C.V=43.95%). Surprisingy the post reform period during which we have switched

over to market economy witnesses a sharp fall in the volatility of our GDP. If we look at the

sectora composition of our GDP then aso we find the same scenario to persist. Astonishingy,

the GDP generated from the Industry and service sectors have experienced very high degree ofvolatility both for the overall period and for the pre reform period.

Table 4

Coefcient of variation of GDP and its components in India

Period GDP Agriculture&Allied Industry Services

1950-512008-09 82.95 45.29 90.52 102.63

1950-511989-90 43.95 27.48 58.64 54.48

1990-912008-09 36.34 16.03 34.17 45.48

However it is once again surprising that both of these two sectors have experienced a

tremendous fall in the degree of volatility in respect of their performance during the post reform

period where the susceptibility towards fluctuation of output is very high. Interestingly enough

the degree of volatility of the performance of the service sector is found to be much higher

(C.V=45.48%) than that of the other two sectors viz industry (C.V=34.17%) and agricuture

(C.V=16.03%) during the post reform period. It seems that the persistence of the high degree

of volatility of the service sector during the post reform period may be due to the cross time

fluctuation of the process of outsourcing of the demand for service by the industrial and

agricultural enterprises. Further it might be the result of the volatility of domestic demand for

services generated out of the government consumption expenditure and the private consumption

expenditure. It is no ess important that the suggishness in the growth of the agricuture and

the industrial sectors in our economy might have produced tremendous adverse impact on the

demand for services.

Table 5

Volatility of NSDP at factor cost at the state level

Period 1960-61 to 2007-2008 1960-61 to 1990-91 1990-91 to 2007-2008 Andhra Pradesh 74.99 48.39 36.04

Assam 67.20 40.60 33.06

Bihar 58.48 34.10 37.16

Gujarat 81.25 58.22 45.94

Haryana 87.34 61.62 43.52

Himacha Pradesh 77.51 46.66 39.96

Karnataka 106.23 90.53 45.19

Keraa 71.16 33.87 41.73

M.P. 65.48 43.36 29.56

Maharashtra 83.59 51 41.3

Orissa 48.99 17.19 32.36

Punjab 72.22 54.69 31.16

Rajasthan 77.75 51.09 36.53

Tami Nadu 74.11 41.64 36.69U.P. 62.92 41.21 32.37

West Benga 77.04 32.77 44.27

If we look at the state level then the Table 5 clearly brings out the fact that almost all the

states have experienced very high voatiity of their NSDP over the period between 1960-61 and


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2007-08 in varying degrees. The vaues of C.V are found to be very high for some states ike

Karnataka, Maharastra, A.P etc and for some states ike Bihar, Orissa, U.P it is reativey ow.

The phase wise vaues of C.V ceary revea that the voatiities of NSDP across states are ower

in the pre reform period as compared to the values for the overall period. It is again interesting

to note that during the post reform period amost a the states excepting W.B; Keraa; Bihar and

Orissa have experienced tremendous fa in the voatiity of their NSDP and the rate fa is muchfaster in the post reform period. However there is substantia inter-state variabiity of the degree

of voatiities of NSDP and its rate of reduction both for the pre and post reform periods. So one

can plausibly conclude that the gradual switchover to the market i.e the policy of liberalisation

has immensely helped reducing the degree of volatility of the growth of our economy and its

states.

The estimates of the sectoral volatility across the states are given in the appendix tables

5, 6, and 7.As far as the agricutura sector is concerned the appendix tabe -5 ceary reveas

that the degree of volatility of its performance is relatively much higher in some states like

Gujarat, Rajasthan, Harayana, Punjab, West Benga and very ow in some states Orissa, Bihar

and Keraa over the period of our study. However if we consider the phase wise C.Vs then the

values are found to be relatively lower during the pre reform period as compared to the overallperiod and it is much ower in amost a the states excepting W.B and Orissa during the post

reforms period. So we find that the agricutura sector has aso experienced ower degree of

volatility during the post reforms period and the rate of fall in the same is also much faster

during the same period. The volatility of the performance of the industrial sector across the

states also reveal almost same scenario both for the overall period and in the pre and post reform

period (see appendix tabe -6). As far as the service sector is concerned we once again find the

same scenario including the faster rates of decline of the volatilities of it s performance across

the states during the post reforms period. Surprisingy, in case of service sector the degrees of

volatility remain very high during the post reforms period as compared to other two sectors.

This clearly indicates variability of the access to the market economy on the part of the states.

One can therefore conclude that the reform process has been able to bring about a reduction inthe volatilities of GDP and its sectoral composition not only at the national level but also at the

cross-state level.

V. STRUCTURAL CHANGE OF GDP AND ITS COMPONENTS

It has aready been found in the previous sections that Indian economy has experienced a

tremendous structural transformation over the period of our study. So one has to determine

the period exacty when the structura break in the trend in GDP ant its sectora composition

has taken pace. We have tested this by using a very simpe test known as cusum test. The

econometric resuts of this test especiay the estimated trend equations are given in the

Appendix. The trend equations for GDP and its three sectors which are given in terms of

the regression resuts-1-4 in the appendix indicate that both the constant and the regression

coefficients are positive and highly significant. The respective F values are also highly

significant indicating the good fit of the mode. Now as far as the structura change of GDP

is concerned we have applied the cusum test on the basis of the assumption that the timing

of the break is unknown. The potting of the cusum vaues as is given in the figure -2 ceary

indicates that the trend line of cusums crosses the upper error bound at the scale value of 54


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which corresponds to the year 2003. So we can say that the structura break of our GDP has

occurred in 2003 i.e. since the inception of the reform process.

Figure 2

Structural Change of GDP

Plot of Cumulative Sum of ResidualsObserv.#

-9

3

15

28

40

-21

12 24 36 48 600

Cusum

Now as far as the structura break in the agricutura and aied sector is concerned the

figure-3 ceary exhibits that the pot (red marked) showing the cumuative sum vaues of the

residuals crosses the upper error bound at the scale value of 48 which corresponds to the year

1997.So we can say that the structural change in the agricultural sector has occurred in 1997.

On the other hand figure -4 shows the nature of the structural change in the industrial sector. .It

is evident from figure -4 that the plot of the cumulative sum of the residuals crosses the upper

error bound at the scae vaue of 52 which corresponds to the year 2001. So we can say that the

structura break in the industria sector has actuay occurred in 2001.

Figure 3Structural Change in Agricultural and Allied Sectors

Plot of Cumulative Sum of Residuals

Observ.#

-7

7

21

36

50

-21

12 24 36 48 600

Cusum


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VI. CONCLUDING OBSERVATIONS

This study examines the nature of growth and voatiity both at the aggregative and as we as the

sectora eve experienced by our economy since independence. We have aso tried to examine

the exact periodwhen the structural transformation not only at the aggregative level but also at

the sectoral level occurred in our economy. This study is based on the secondary data available

from the EPW research foundation, C.S.O and Reserve Bank of India.

We find that Indian Economy has undergone a tremendous structura transformation over

the period of our study. It is found that the post reform period has witnessed relatively faster

rates of growth rates of GDP and aso of the NSDP (at the cross-sate eve)incuding its sectora

composition excepting for agricutura sector and aso a sharp reduction in the cross state

voatiity in the growth rate of NSDP as compared to pre-reform period. We aso find that the

reform process has not only given a tremendous boost to the growth performance of our economy

at the aggregative level as well as at the cross-state level but it has also helped reducing the inter-

state disparity in economic growth. Moreover we find a radical structural transformation of our

economy towards a service sector revolution to take place during the post reforms period. The

cusum test reveals that the structural break in the behavior of GDP and it sectoral composition

has actually occurred in various years since 1997.Further the falling pattern of volatilities in the

behavior of GDP and its sectora composition have started around the mid sixties. The anaysis

of the behavior of the GDP, NSDP and its sectora composition at the nationa as we as at the

cross-state level clearly indicates that our economy has been able to reap the benefits of the

market economy.

References

Bhaduri, Amit (2008): Predatory Growth, lecture deivered at the Dept. of Economics, University of Cacutta,

Kokata, and March28.

Greene, Wiiam H (2006) : Econometric Anaysis, Pearson Education, Doring Kindersey(India) Pvt ltd, New

Delhi.

Rakshit,Mihir (2007): Services- ed Growth: Indian Experience Money and Finance,February. (2009): Macroeconomics of Post Reform India,Oxford University Press,New Dehi.


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APPENDIX

Table 1

Annual Compound Growth rate of NSDP (at factor cost) (%)

States

Period

1961-71 1971-81 1981-91 1991-01 2001-08 1961-91 1971-91 1991-08 1961-08

Andhra Pr 2.92 3.13 7.06 3.80 7.65 4.35 5.08 5.37 4.72

Assam 3.07 3.36 4.78 5.89 2.22 3.73 4.07 4.36 3.96

Bihar 1.94 2.74 4.26 2.39 8.18 2.98 3.50 4.74 3.61

Gujrat 4.53 10.26 0.99 5.80 9.25 5.19 5.53 7.20 5.92

Hariyana 5.94 4.53 6.58 4.75 8.71 5.68 5.55 6.36 5.93

Himacha Pr 5.81 3.04 5.60 5.14 6.92 4.81 4.31 5.87 5.19

Karnatak 4.22 3.12 13.69 7.62 6.67 6.91 8.27 7.23 7.02

Keraa 3.98 2.28 3.73 5.07 8.27 3.32 3.00 6.38 4.42

Madhya Pr 1.70 3.34 6.01 3.65 5.36 3.67 4.66 4.35 3.91

Maharashtra 2.92 4.40 6.26 5.64 7.75 4.51 5.32 6.50 5.23

Orrisa -1.72 1.88 2.48 3.94 6.46 0.86 2.18 4.97 2.33

Punjab 5.13 4.60 5.73 4.64 4.94 5.15 5.17 4.76 5.01

Rajastan 4.96 0.90 7.85 4.61 6.66 4.53 4.32 5.45 4.86

Tamilnadu 2.51 1.72 6.31 6.11 5.65 3.49 3.99 5.92 4.36

Uttaar Pr 2.51 2.95 5.30 2.75 7.18 3.58 4.12 4.55 3.93

West Benga 2.19 3.13 3.82 7.01 6.97 3.04 3.47 6.99 4.45

C.V 58.03 59.89 48.96 28.93 25.03 33.23 30.26 17.76 23.30

Tabe 2

Annual Compound Growth rate of Agriculture and Allied Activities (at factor cost) (%)

States

Period

1961-71 1971-81 1981-91 1991-01 2001-08 1961-91 1971-91 1991-08 1961-08

Andhra Pr 2.10 1.32 3.49 2.59 4.77 2.30 2.40 3.48 2.72

Assam 1.63 2.83 1.16 2.64 0.80 1.87 1.99 1.88 1.87

Bihar 0.94 1.14 2.45 -0.85 3.76 1.51 1.79 1.02 1.33

Gujrat 5.12 8.74 -2.48 0.69 15.57 3.69 2.98 6.57 4.72

Hariyana 5.33 3.17 5.20 1.33 3.43 4.56 4.18 2.19 3.70

Himacha Pr 5.70 2.19 2.81 -0.14 2.88 3.56 2.50 1.09 2.66

Karnatak 3.83 0.38 10.87 6.62 -3.92 4.94 5.49 2.15 3.92

Keraa 1.93 0.99 2.52 -0.90 2.07 1.81 1.75 0.31 1.27

Madhya Pr 1.06 1.05 5.09 -1.13 5.31 2.38 3.05 1.47 2.05

Maharashtra -1.28 3.96 4.31 3.01 3.68 2.30 4.14 3.28 2.65

Orrisa -3.06 1.28 -2.09 1.68 4.59 -1.31 -0.42 2.87 0.18

Punjab 4.70 4.23 5.36 3.17 2.52 4.76 4.79 2.90 4.09

Rajastan 6.09 -1.28 7.18 -1.45 6.60 3.93 2.86 1.79 3.15

Tamilnadu 0.13 -1.88 3.95 3.85 0.02 0.71 1.00 2.25 1.26

Uttaar Pr 1.61 1.94 2.78 1.66 2.62 2.11 2.36 2.05 2.09West Benga 1.62 4.39 0.39 5.85 3.85 2.12 2.37 5.02 3.16

C.V 111.66 116.04 99.27 134.85 109.27 63.18 53.95 61.61 47.86


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Tabe 3

Annual Compound Growth rate of Industry (at factor cost) (%)

States

Period

1961-71 1971-81 1981-91 1991-01 2001-08 1961-91 1971-91 1991-08 1961-08

Andhra Pr 5.58 5.60 11.06 2.98 6.69 7.38 8.30 4.49 6.33

Assam 6.73 3.00 3.75 11.57 1.55 4.48 3.37 7.33 5.50Bihar 6.25 3.81 4.13 -1.07 2.96 4.72 3.97 0.57 3.20

Gujrat 4.24 10.27 5.07 5.40 9.55 6.49 7.63 7.09 6.71

Hariyana 8.69 4.55 9.85 3.36 8.52 7.67 7.17 5.45 6.86

Himacha Pr 14.07 -3.01 17.44 8.37 11.38 9.12 6.73 9.60 9.29

Karnatak 5.62 10.41 11.86 4.93 7.77 9.26 11.13 6.09 8.10

Keraa 6.97 1.41 3.91 2.64 6.34 4.07 2.65 4.15 4.10

Madhya Pr 7.71 6.06 8.70 3.71 2.34 7.48 7.37 3.14 5.89

Maharashtra 5.65 5.17 5.63 2.60 6.06 5.48 5.40 4.01 4.95

Orrisa 2.85 1.44 8.24 3.94 4.91 4.14 4.78 4.34 4.21

Punjab 6.36 4.71 10.29 2.99 4.68 7.10 7.46 3.68 5.85

Rajastan 1.88 4.50 9.38 8.23 6.01 5.21 6.91 7.31 5.97

Tamilnadu 6.19 4.11 5.52 5.32 2.28 5.27 4.81 4.06 4.83

Uttaar Pradesh 5.50 5.93 8.19 0.57 6.24 6.53 7.05 2.86 5.19

West Benga 1.61 0.99 4.59 5.83 3.46 2.38 2.77 4.85 3.27

C.V 48.53 76.79 46.50 69.17 48.94 31.54 37.39 43.84 28.99

Table 4

Annual Compound Growth rate of Services (at factor cost) (%)

States

Period

1961-71 1971-81 1981-91 1991-01 2001-08 1961-91 1971-91 1991-08 1961-08

Andhra Pr 3.71 4.97 9.03 4.88 9.39 5.88 6.98 6.72 6.18

Assam 5.60 4.64 9.83 6.71 3.20 6.67 7.21 5.25 6.15

Bihar 2.26 5.08 6.58 5.85 11.03 4.63 5.83 7.96 5.82

Gujrat 4.01 11.93 1.26 8.44 6.64 5.64 6.47 7.69 6.38Hariyana 5.95 7.21 6.82 8.86 11.42 6.66 7.01 9.91 7.82

Himacha Pradesh 4.61 5.34 6.28 7.41 7.23 5.41 5.81 7.33 6.10

Karnatak 4.48 3.86 17.69 9.27 10.56 8.50 10.56 9.80 8.97

Keraa 5.75 4.03 4.67 8.70 10.11 4.82 4.35 9.28 6.41

Madhya Pr 1.10 6.39 5.82 7.99 6.33 4.41 6.11 7.30 5.45

Maharashtra 4.87 4.12 7.73 8.06 9.29 5.56 5.91 8.56 6.64

Orrisa 1.07 3.51 7.01 5.64 7.86 3.84 5.25 6.55 4.81

Punjab 5.36 5.09 4.32 7.22 7.06 4.92 4.70 7.15 5.73

Rajastan 3.78 3.59 8.21 8.20 7.03 5.17 5.88 7.72 6.09

Tamilnadu 3.74 3.40 8.11 7.37 8.31 5.06 5.73 7.76 6.03

Uttaar Pr 3.63 3.75 7.54 4.54 10.14 4.96 5.63 6.81 5.62

West Benga 3.12 2.91 6.43 8.05 9.11 4.14 4.65 8.49 5.69

C.V 38.02 43.56 46.72 19.52 25.43 21.22 23.56 15.87 15.49


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Table 5

Coefcient of Variation of NSDP in Agriculture and Allied Activities at factor cost

Period 1960-61 to 2007-08 1960-61 to 1990-91 1990-91 to 2007-08

Andhra Pradesh 42.25 21.92 23.84

Assam 31.64 21.68 14.82

Bihar 20.66 17.74 14.63Gujarat 66.93 52.49 49.97

Haryana 54.36 49.88 14.08


Karnataka 72.76 61.14 24.35

Keraa 21.68 18.89 8.96

M.P. 37.07 28.17 14.15

Maharashtra 47.66 30.35 21.87

Orissa 16.61 16.5 18.73

Punjab 58.14 50.95 18.86

Rajasthan 47.31 42.67 17.03

Tami Nadu 31.89 14.82 14.73

U.P. 34.28 24.35 13.89

West Benga 51.56 27.91 30.62

Tabe 6

Coefcient of Variation of NSDP in Industry at factor cost

Period 1960-61 to 2007-08 1960-61 to 1990-91 1990-91 to 2007-08

Andhra Pradesh 84.95 82.88 28.1

Assam 87.19 47.04 52.65

Bihar 39.34 45.15 12.37

Gujarat 90.29 66.3 43.75

Haryana 90.8 80.61 38.15


Karnataka 104.92 104.49 42.12

Keraa 57.44 39.7 27.71

M.P. 74.77 75.14 19.1

Maharashtra 67.98 56.91 24.63

Orissa 69.63 48.16 27.65

Punjab 80.36 81.1 21.73

Rajasthan 95.81 63.46 43.84

Tami Nadu 67.51 54.49 25.34

U.P. 68.94 73.3 21.61

West Benga 60.93 25.42 32.89


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Appendix Figure 3

Nature of volatility of GDP originating from Industry During 1950-51 to 2008-09

Plot of Cumulative Sum of Squared ResidualsObserv.#

.1

.4

.6

.9

1.2

-.2

12 24 36 48 600

CusumSqd

Appendix Figure 4

Nature of volatility of GDP originating from Services During 1950-51 to 2008-09

Plot of Cumulative Sum of Squared ResidualsObserv.#

.1

.4

.6

.9

1.2

-.2

12 24 36 48 600

CusumSqd

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