New Delhi, Aug 29 (UNI) Confirming fears of a slowdown, the GDP for the first quarter of 2008-09 grew by 7.9 per cent as compared to 9.2 per cent for same quarter last year, with both agriculture and manufacturing plummeting to lower levels.
According to data released by the Central Statistical Organisation (CSO), agriculture in Q1 2008-09 grew by 3 per cent as compared to 4.4 per cent in the corresponding period last year and manufacturing growth was 5.6 per cent in Q1 this fiscal as compared to 10.9 per cent in same period last year.
The growth during the first quarter of the current fiscal was the lowest in four years and much below the 8.8 per cent expansion in the previous quarter.
The fears that the tight money policy was acting harshly on the manufacturing sector were confirmed by the data and analysts were wondering as to what would be its impact in the coming months as interest rates would continue to remain hard in view of the fact that both the Central Bank and government were keeping prices under check as their top priority.
Among the remaining six sectors, only construction was able to perform note ably better with growth rate of 11.4 per cent as compared to 7.7 per cent for the same period last year.
'Mining and Quarrying' too was somewhat better with the growth rate of 4.8 per cent in Q1 FY09 as compared to 1.7 per cent in the same period last year.
One of sectors which showed worst performance was 'Electricity, Gas and Water Supply' with growth of 2.6 per cent as compared to 7.9 per cent in Q1 of FY08.
'Trade, Hotel, Transport and Communication' were a little down to 11.2 per cent in Q1 of FY09 as compared to 14.2 per cent in Q1FY08.
Another services sector--'Financing, Insurance, Real Estate and Bus Services'-- showed a substantial slump from 12.6 per cent in Q1 of FY08 to 9.3 per cent in Q1 of FY09.
However, 'Community, Social and Personal Services' were up with a growth rate of 8.4 per cent in Q1 of FY09 as compared to 5.2 per cent in the same period a year ago.
The Indian economy in the last five years has averaged a growth rate of 8.8 per cent. But today's figure of GDP was the lowest since 2004.
While high by historical standards, GDP this quarter is a way below that Eleventh Plan target of 10 per cent plus per annum.
Volatility in the manufacturing sector began last September and has been driven by declines in interest rate sensitive sectors like transport, equipment, construction and consumer durables.
Tight money policy was compressing consumer spending and has dampened business sentiments and investment climate.
The downside risk to growth expectations in 2008-09 are primarily, from further deterioration in global conditions with the attendant impact from India.
Continuing high crude prices as well as food and commodity prices along with high inflation are not only leading to harsh lending of the Indian economy but the entire Asian continent. Even the dragon--the fastest growing Chinese economy-- is expected to perform below its historic average of ten per cent growth.
UNI MP/GS AK MIR KP1952