The Hindu : Business : GDP growth dips to 7.9% in first quarter

Online edition of India's National Newspaper
Saturday, Aug 30, 2008
ePaper | Mobile/PDA Version

Business

Business

GDP growth dips to 7.9% in first quarter

Special Correspondent

Slippages in manufacturing pull down growth

Chidambaram optimistic of 7.7-8% growth
Slump in power generation

NEW DELHI: Confirming fears of a likely slowdown, India’s GDP (gross domestic product) growth dipped to 7.9 per cent in the first quarter this fiscal from 9.2 per cent in the same quarter of 2007-08, mainly owing to slippages in manufacturing and other sectors in the wake of inflationary pressures and high interest rates.

The data on GDP growth estimates released by the Central Statistical Organisation (CSO) here on Friday reveal the 7.9 per cent growth as being on expected lines, given the fact that the deceleration in the manufacturing sector — as a fall-out of the inflation control measures — coupled with the slump in power generation tended to pull down the overall economic growth to its lowest level for any quarter over the last three years.

While the growth in the manufacturing sector almost halved to 5.6 per cent during April-June this fiscal from 10.9 per cent in the same quarter of 2007-08, the growth in electricity, gas and water also slumped to 2.6 per cent from 7.9 per cent. The farm sector growth also eased, though moderately, to three per cent from a high base of 4.4 per cent, it was the construction sector with a growth of 11.4 per cent as compared to 7.7 per cent in the previous fiscal that stemmed a further fall in GDP growth.

In the current tight monetary policy scenario as a measure to rein in inflation, the near eight per cent growth is by and large likely to be maintained during the entire fiscal year in keeping with varying projections of 7.7 per cent to over eight per cent by the Finance Minister, the Reserve Bank of India as well as the Prime Minister’s Economic Advisory Council (PMEAC).

Commenting on the first quarter’s GDP growth in Mumbai, an upbeat Finance Minister P. Chidambaram said: “I am confident that this year too we will be more or less correct in our assessment of yearly growth. For example, last year I was the only one who maintained that it would be close to nine per cent and eventually it turned out to be 9.1 per cent. I am confident this year also growth will be close to eight per cent.” Despite the inflationary concerns, what is heartening is the fact that the investment in the economy has continued to be buoyant. The investment-GDP ratio has risen to 37.9 per cent which, according to a Finance Ministry official, means that the GDP growth is likely to be maintained.

Printer friendly page
Send this article to Friends by E-Mail

Business