The Hindu Business Line : Economy on a roll; GDP up 9.3% in Q1

Two important economic data made public on Friday show that the country’s economy continues to be in fine fettle. The Central Statistical Organisation (CSO) puts the estimated gross domestic product (GDP) growth in the first quarter of the current fiscal at 9.3 per cent.

Separately, the inflation rate for the week ended August 18 fell to a 15-month low at 3.94 per cent. The GDP growth in the first quarter of the current fiscal was driven by strong performance in agriculture and services, along with support of the manufacturing sector, whose performance was marginally lower than last year.

At 9.3 per cent, the GDP growth is being considered good, though it is a shade lower than 9.6 per cent recorded in the previous fiscal’s first quarter. Overall, there is an expectation that 2007-08 would close with nine per cent growth.

Sector-wise break-up

Sector-wise break-up of the GDP data shows that agricultural growth in Q1 this year is estimated to be 3.8 per cent (2.8 per cent), manufacturing at 11.9 per cent (12.3 per cent) and construction at 10.7 per cent (10.5 per cent).

The first quarter GDP expansion by 9.3 per cent comes on top of 9.4 per cent GDP growth recorded in full fiscal 2006-07, which was the best performance in the last 18 years. The growth performance had a positive impact on the benchmark Sensex, which climbed up by 200 points at close on Friday.

“Although the 9.3 per centgrowth was a bit below the growth in same period last year, given the circumstances on account of external situation, they are quite satisfactory”, Mr P. Chidambaram, Union Finance Minister, told reporters after the CSO released thefirst quarter GDP estimates for 2007-08 here today.

According to the CSO, the quarterly GDP at factor cost at constant (1999-2000) prices was estimated at Rs 7,23,132 crore in April-June 2007 against Rs 6,61,335 crore in the same period last year.

In fiscal 2006-07, GDP at current market prices was Rs 41,25,725 crore. This was equivalent to $912 billion at an average rate of Rs 45.25 per dollar for 2006-07.

The economic activities that registered significant growth in first quarter of current fiscal are electricity, gas and water supply at 8.3 per cent (5.8 per cent), trade, hotels, transport and communications at 12 per cent (12.4 per cent), financing, insurance, real estate and business services at 11 per cent (10.8 per cent), community, social and personal services at 7.6 per cent (11.3 per cent) and mining and quarrying at 3.2 per cent (3.7 per cent).

Analysts point out that the growth has come in a scenario of tight monetary policy prescriptions. The Reserve Bank of India has pegged the GDP growth estimate for current fiscal at 8.5 per cent.

The rupee appreciation against the US dollar during the current calendar year had some beneficial impact on the manufacturing sector in terms of lower import cost of capital goods.

The country’s wholesale price index-based inflation rose 3.94 per cent in the week ended August 18, lower than the previous week’s 4.10 per cent.

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