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GDP growth rate slips to 7.6% in second quarter

NEW DELHI: Aided by reasonably healthy performances by construction and services sectors, the Indian economy notched up a growth rate of 7.6 per cent during the second quarter this fiscal even in the wake of the spill-over effects of the global financial meltdown.

Pulled down by the poor show by sectors such as manufacturing, agriculture and mining, the GDP (gross domestic product) growth during July-September this fiscal, although significantly lower than the 9.3 per cent growth achieved in the same quarter of 2007-08, still belied general expectations in view of the slowdown creeping into various sectors of the economy.

According to official data released here on Friday, the moderation to 7.6 per cent during the second quarter has also resulted in the GDP growth slipping to 7.8 per cent during the first half of 2008-09 from the robust 9.3 per cent growth rate achieved during the same six-month period last fiscal.

However, in the wake of the meltdown when developed economies are slipping into recession, Finance Minister P. Chidambaram termed the 7.8 per cent growth during the half-year as “healthy” and “satisfactory”.

“The first half growth rate at 7.8 per cent is a satisfactory and healthy growth rate with regard to the global slowdown,” he said, while conceding that the manufacturing sector remained a “problem area” with the sectoral growth halving to 5.3 per cent from 10.1 per cent in the previous fiscal.

Even as the electricity sector was yet another laggard with its growth decelerating to 3.1 per cent in the first half of 2008-09 from 7.4 per cent a year earlier, Mr. Chidambaram said that the Government would look into the problems of certain sectors such as textiles, gems and jewellery, marine products, hotel, financing and real estate which have been affected by the ongoing financial crisis. The agriculture and allied sector, however, is expected to do well during the second half of the fiscal, he said.

Commenting on the GDP growth during the second quarter, Prime Minister’s Economic Advisory Council (PMEAC) member M. Govinda Rao said: “It is better than expected, but in the second half there will be definitely a slowdown in manufacturing and services. I expect the overall GDP figure to be at seven per cent this fiscal.”

Gross fixed capital formation, representing the value of additions in fixed assets by business, government and households and considered crucial for future business activity, grew 35.3 per cent in the second quarter from 33.4 per cent in the same quarter a year ago. In absolute terms, the size of domestic economy is valued at Rs. 7,71,451 crore in the second quarter as compared to Rs. 7,16,982 crore a year ago.

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