The Hindu : Business : 9.3 p.c. GDP growth in Q1

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9.3 p.c. GDP growth in Q1

Special Correspondent

Manufacturing, construction and services drive growth

’Momentum
will be sustained’
Business services grow at 11 p.c.

NEW DELHI: The economy appears to be continuing on a roll, setting the pace for the current fiscal with a gross domestic product (GDP) growth of 9.3 per cent during the first quarter and the inflation rate sliding to its lowest level in 15 months to 3.94 per cent.

Farm sector

Coming in the wake of various fiscal and monetary tightening measures, the high GDP growth — although a tad lower than the 9.6 per cent growth posted during the same quarter of 2006-07 — was driven mainly by sectors such as manufacturing, construction and services. Helping in maintaining a plus nine per cent growth during the quarter was even the farm sector which chipped in with a growth of nearly four per cent.

Commenting on the GDP figures released here on Friday, Finance Minister P. Chidambaram expressed confidence that the overall growth for 2007-08 would be close to nine per cent, especially when the “satisfactory” first quarter growth was on the back of a higher 9.4 per cent expansion during 2006-07, the fastest in 18 years.

“Although provisional estimates of 9.3 per cent GDP growth during [the] first quarter are [a] shade below than [the] growth last year [in the corresponding period], but given the circumstances on account of external situation, they are quite satisfactory,” Mr. Chidambaram said.

“As long as savings are high, capital formation remains high, it supports the hypothesis that investment will remain buoyant. I am confident that the GDP growth rate will remain close to nine per cent this year as well,” he said. It would ultimately help to revise the average GDP growth of 8.6 per cent over the past three years, he said.

Echoing a similar sentiment was Planning Commission Deputy Chairman Montek Singh Ahluwalia who said: “[The GDP] growth has widely been expected to fall. [The] RBI had expected an 8.5 per cent growth for the year. So, 9.3 per cent growth is good.”

As the growth during 2007-08, the first year of the XI Plan is expected to be 8.5-9.0 per cent, “if this rate is sustained, it will be considered good,” Mr. Ahluwalia said.

According to the official data released by the Central Statistical Organisation (CSO), the buoyant manufacturing sector grew by 11.9 per cent, although a shade lower than the 12.3 per cent growth recorded during the first quarter of the previous fiscal.

Agriculture and allied activities witnessed a higher growth of 3.8 per cent during the three months this year.

While trade, hotels, transport and communication posted a growth of 12 per cent, other sectors such as finance, insurance, real estate and business services also grew by 11 per cent. Aiding in maintaining the higher growth were other sectors such as electricity, gas and water supply which grew by 8.3 per cent during the quarter as compared to 5.8 per cent in the like quarter of 2006-07.

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