New Delhi, Nov 30 (IANS) The Indian economy grew by 8.9 percent in the second quarter of this fiscal, latest data on gross domestic product (GDP) showed Tuesday, beating the government’s own expectations of an 8.5 percent expansion this whole fiscal.
The growth was identical to the 8.9 percent expansion logged during the first quarter and 0.2 percentage points above the 8.7 percent registered in the July-September period of the previous fiscal, data released by the Central Statistical Organisation showed.
The most impressive aspect within the national income data was the 4.4 percent growth logged by the farm sector during the second quarter as opposed to a mere 0.9 percent in the like period of last year.
The output of manufacturing was up 9.8 percent, while trade and communications expanded 12.1 percent during the quarter under review. This apart, the construction industry grew 8.8 percent, financial services 8.3 percent and mining 8 percent.
The growth obviously impressed North Block, the headquarters of the finance ministry.
‘In the first two quarters we have grown nearly 8.9 percent. So now I can confidently say that the annual growth will not be less than 8.75 percent,’ said Finance Minister Pranab Mukherjee.
‘Our economy not only recovered rapidly from the global downturn, but also took the monsoon failure last year in its stride and is now showing robust growth,’ Mukherjee said at a conference on inclusive growth.
Chief Economic Advisor in the Finance Ministry Kaushik Basu said the Indian economy was showing signs of a recovery since the second quarter of last fiscal — but this kind of growth had left him pleasantly surprised.
‘This growth rate has not only beaten market expectations, but much better than my own expectations. In the third quarter we are expecting to do better, Basu said, adding: ‘The GDP numbers seems exciting and highly endorse the India’s growth story.’
Even the Indian industry was caught by surprise by the numbers, especially in the farm sector’s output, even though they expected some more fireworks from the manufacturing sector, which expanded 9.8 percent in the second quarter.
Manufacturing sector expanded at a much faster pace in first half of the current fiscal by 11 percent as compared to 6.2 percent during the same period of 2009-10, supported by strong output and a sharp rise in new business investments.
‘Although there has been some moderation in industrial growth compared to the first quarter, agriculture and services have both recovered,’ said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
‘Yet, the recovery in agriculture is likely to have a positive impact on rural demand in the coming quarters and maintain the positive momentum,’ he said. ‘It is also heartening that the data shows a revival in both consumption and investment.’
The Federation of Indian Chambers of Commerce and Industry (FICCI) warned that the marginal slowdown in industrial growth should keep the central bank away from tightening its monetary policy any further.
‘In fact what is required is greater credit availability and reduction in high interest rates to stimulate the manufacturing, construction, electricity, mining and other core sectors,’ the chamber said in a statement.
According to Tushar Poddar, economist with leading investment banking firm and advisory Goldman Sachs, the growth during the second quarter was the conses expectations of 8.2 percent from clients and their own prediction of 8.1 percent.
‘The uptick in the July-September quarter was across the board,’ Poddar said. ‘The strong GDP number suggests that domestic demand remains robust across the board.’
He said having realised 8.9 percent in the first two quarters, the overall growth for the year as a whole could be well above the 8.5 percent predicted earlier.
