Thaindian News

New Delhi, Aug 30 (IANS) Despite a relatively higher growth of 3.9 percent in farm output, the Indian economy expanded only at 7.7 percent in the April-June quarter of current fiscal — the slowest in the past six quarters, against 8.8 percent in the like period of 2010-11.

Official data on the estimates of national income released Tuesday showed that the growth rate was pulled down mainly by comparatively lower expansion in manufacturing output at 7.2 percent, against 10.6 percent in the corresponding period of 2010-11.

The data released by the Central Statistical Organisation (CSO) on India’s gross domestic product (GDP) presented a mixed bag for the Indian economy that grew by 8.5 percent in 2010-11 and 8 percent in the year before.

The Prime Minister’s Economic Advisory Council (PMEAC) had projected GDP to grow 8.2 percent in the current fiscal.

Finance Minister Pranab Mukherjee termed the growth figures disappointing but said it came in the wake of global economic uncertainty.

“It is no doubt disappointing. We shall have to keep in mind that there are still some areas of uncertainty - uncertainty in global scenario, uncertainty of monsoon, but of course monsoon is not yet over, last leg is yet to be over,” Mukherjee told reporters here.

Tuesday’s figures showed a sharp fall in the growth of construction and mining sectors, at 1.2 percent and 1.8 percent in the quarter ended June, from 7.7 percent and 7.4 percent, even as the growth in services such as transport and trade was higher at 12.8 percent.

While agriculture grew at 3.9 percent, against 2.4 percent last year, electricity and gas expanded by 7.9 percent, against 5.5 percent, and financial services grew by 9.1 percent, as against 9.8 percent.

“There has been a significant downward revision in the GDP growth rate of first quarter of 2010-11 from the earlier 9.3 percent to 8.8 percent. This has pushed up the growth rate in first quarter of 2011-12 to 7.7 percent,” said Rajiv Kumar, secretary general of the Federation of Indian Chambers of Commerce and Industry.

He said if the economy had to grow 8.2 percent, according to the PMEAC projection, then the GDP would have to expand by 8.3 percent for the remainder of the fiscal.

“That would mean, agriculture growing at 2.7 percent, industry at 7.7 percent and service sector at 10 percent respectively. It is unlikely that these growth rates will now be achieved,” Kumar added.

Chandrajit Banerjee, director general of the Confederation of Indian Industry, too agreed that achieving an 8 percent growth target seemed improbable and said the Reserve Bank of India (RBI) should not increase rates again, something the central bank has done regularly since Jan 2010 to fight high inflation.

“Although CII expects GDP growth to recover in the second half, achieving the 8 percent target is tough. We would urge the RBI to refrain from hiking interest rates in the forthcoming policy, taking note of the weakness in the economy,” said Banerjee.