The Hindu Business Line : Economy grows at 8 pc in Q2 — Manufacturing, services are main drivers; some key sectors falter

WITH the manufacturing and the services sectors on a roll, the economy clocked an eight-per cent growth for the second consecutive quarter this fiscal.

If the current trend were to continue, it might not be difficult for the economy to post a growth of 7.5 per cent for the full year, as projected by the Prime Minister, Dr Manmohan Singh, on Tuesday.

The Q1 growth in gross domestic product (GDP) was 8.1 per cent and the second quarter was close behind with eight per cent, whereas the comparative figures for the previous fiscal were 7.6 and 6.7 per cent, respectively.

Cumulatively, if the first half performance is taken into consideration, April-September 2005 posted an 8.1-per cent growth against 7.1 per cent in the 2004 first-half.

While the overall GDP figures look good, the flip side is the second quarter performance of some key segments in the economy is a shade lower than that in Q1.

For instance, the major drivers of growth - manufacturing and services - posted growth rates of 9.2 per cent and 12 per cent, respectively, in the second quarter, lower than the 11.3 per cent and 12.4 per cent in the first quarter of 2005-06. Agriculture growth, however, has remained steady at two per cent in both the quarters.

The electricity, gas and water supply segmentwas down to a 3.3-per cent growth in the July-September 2005 period from 7.9 per cent in April-June.

Similarly, mining and quarrying, which includes crude oil production, posted a negative 1.1 per cent in Q2 this fiscal, down from a growth of 3.2 per cent in the first quarter.

The construction segment reported a 7.4-per cent Q2 growth, marginally down from 7.9 per cent in Q1.

In the tertiary sector, financing, insurance, real estate and business services, however, gained some momentum in Q2 by notching up a 9.9-per cent growth, against 8.3 per cent in Q1, while community, social and personal services reported 6.7 per cent (6.1 per cent).

According to the quarterly estimates of GDP for the second quarter of 2005, released today by the Central Statistical Organisation, the country's GDP (at factor cost at constant (1993-94) prices) in Q2 stood at Rs 3,76,878 crore — an eight-per cent growth over the Rs 3,48,867 crore in Q2 of 2004-05.

In the services sector, the key indicators of Railways - net tonne kilometres and passenger kilometres - showed a growth of 2.2 per cent and 6.7 per cent, respectively, during the second quarter of 2005-06.

In the second quarter of the current fiscal, the cargo handled at major ports and airports grew 13.6 per cent and 19.5 per cent respectively.

While passengers handled by the civil aviation sector grew 19.2 per cent, the total stock of telephones including WLL and cellular phones grew 31.2 per cent in the second quarter of the current fiscal.

Aggregate bank deposits and bank credits grew 19.2 per cent and 34.6 per cent respectively.

The GDP at factor cost at current prices in Q2 2005-06 is estimated at Rs 7,23,657 crore, against Rs 6,49,163 crore in the second quarter of 2004-05, an increase of 11.5 per cent.

The Central Statistical Organisation said the time lag in the quarterly-GDP releases is being reduced from three months to two months.

The release of estimates for the first quarter will, however, continue to have a three-months time lag due to the current status of data availability from various source agencies.

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