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

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PHARMACEUTICALS-Of Profits and Losses

there are misgivings about the CSO's projection of a slightly faster growth of the financial and business services sector at 48 per cent this year compared to 4.3 per cent last year. True, the difference of 0.5 percentage point is modest enough, but the very idea of an acceleration in the growth of real GDP originating in the financial sector, where all available signs arc of sluggishness and a marked slow-down in activity, is questionable. The implied basis of the CSO's estimate is the rate of expansion of money supply (M,) and of aggregate bank deposits, the growth rates of both of which have shown a sharp decline so far this year and the expectations are that the second half of the year will sec a further deceleration. Money supply (M3) growth (up to February 2) was Rs 43,615 crore (8.2 per cent) against Rs 50,467 crore (11.2 per cent) in the corresponding period of last year. The decline in the rate of expansion of bank deposits has been much sharper. The rise in bank deposits so far this year at Rs 26,671 crore (6.3 per cent) has been notably poor compared to Rs 31,903 crore (8.7 per cent) in the corresponding period of 1994-95. The RBI had projected likely deposit growth this year at Rs 65,000 crore (17 per cent) but the actual growth may turn out to be not more than Rs 45,000 crore (less than 12 per cent compared to the growth of 16.1 per cent in 1994-95). Without going into the larger question of the validity of basing the estimation of GDP growth in the financial sector on such indicators as M1 and aggregate deposits, it can be said with some confidence that 1995-96 is likely to see a distinct decelerat ion in the growth of value added in this sector. Once account is taken of all these factors, GDP growth in 1995-96 may turn out to be 4 7 to 4.8 per cent at best, that is, far below the 6.2 per cent projected by the CSO in its advance estimates.

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