Belying predictions, the Indian economy grew by a significant 7.9% in the second quarter of this fiscal, up from 6.1% in the previous quarter, essentially due to a good showing by the industry and the services sector. The growth compares favourably to the figure of 7.7% recorded in the July-September quarter in the previous year.
Consequently, the economy rose by 7% in the first half ending 30th September of the current fiscal on the back of stimulus packages and revival of domestic demand, giving hopes that final figures for the year could be much higher.
The government, including finance minister Pranab Mukherjee, the RBI and the Planning Commission had predicted a growth of about 6%-7%, while global agencies and analysts forecast it to be even lower.
The prime minister's economic advisory panel had pegged the economy to grow by around 6.1% in the second quarter due to the impact of a weak monsoon on agriculture.
During this period, financing, agriculture and real-estate growth stood at 7.7%. The surge in GDP numbers was helped by the manufacturing sector, which grew 9.2% in the second quarter vis-a-vis 5.1% a year earlier.
Analysts were expecting a growth rate of 6.1%-6.6% in the second quarter. The economic growth of close to 8% in the second quarter is also remarkable in the context of just 0.9% expansion in farm production due to a weak monsoon and continued contraction in exports due to slackening demand overseas.
However, the manufacturing sector grew by 9.2% in the July-September period compared to 5.1% in the corresponding period of the last fiscal and mining and quarrying grew by 9.5% versus 3.7% recorded in FY09.
Community, social and personal services expanded by double digits at 12.7% against 9%. Despite being affected by the international slowdown, trade, hotels, transport and the communications sector grew by 8.5%, which is lower than 12.1% a year ago.
Financing, insurance, real-estate, and business services rose by 7.7% against 6.4%. Electricity, gas and water supply were up 7.4% compared to 3.8%. Construction rose by 6.5%, down over 9.6% a year ago.
It was after September, that growth declined to 5.8% in the subsequent two quarters last year. So, if the trend continues, the growth rate is expected to be much higher in the second half of this fiscal.
The size of the domestic economy stood at Rs17.90 lakh crore in the first half of FY10. -Yogesh Sapkale [email protected]