There is growing evidence that the step-up in India’s growth which set in during 2003-04 is strengthening into an upward shift in the underlying trend. This acceleration of growth has been accompanied by a significant moderation of volatility, particularly in the period 2003-07. There are also indications of small but important shifts in the composition of growth.
The services sector continues to be the main stay of the economy, contributing 73 per cent of overall growth; however, services led growth is getting reinforced by a sustained resurgence in industrial activity after a long hiatus of slow down and restructuring during the period 1996-2003. The buoyancy in industrial performance has been the most heartening feature of India’s growth story.