India clocks 8.8% GDP growth in Q1

Finance Minister Pranab Mukherjee is quite confident that economy will grow by not less than 8.50-8.75% this fiscal. Addressing the media in New Delhi he said, “The numbers are quite encouraging ... more encouraging point is 12.4% growth which has been registered in the manufacturing sector. I think the highest growth rate in the last 11 quarters ... I do hope it will be possible to maintain this level of growth.”

Manufacturing sector figures were the limelight of the stats released on August 31, compared to mere 3.8% growth rate in the same period last year it clocked 12.4% figure in Q1 of 2010-2011.

However, it all is not that much well with the other sectors especially financial services and agriculture. Financial services had recorded 6% growth rate in April-June 2009-10. Agriculture sector grew by 2.8%, although higher than 1.9% in the year-ago period, but it is nowhere near the target of 4%.

Pranab Mukherjee said, “We shall have to reach the 4% growth in agriculture to have sustainable growth ... Keeping that in view, I am quite confident that whatever was projected in the Economic Survey while projecting the Budget for the year that GDP growth will not be less than 8.5% to 8.75%.”

All other major sectors like Construction grew by 7.5% compared to 4.6%. But financial, insurance and real estate services expanded by just 8 per cent, against a growth rate of 11.8% in the year-ago quarter.

Trade, hotels and communication services rose by 12.2%, against 5.5% during April-June 2009.

But it is not that much rosy when you dig dipper in these stats, the ‘demand' side data suggest a different picture.

Latest CSO figures say that private final consumption expenditure increased a mere 0.3 per cent in real terms during April-June 2010, while Government consumption spending shrunk 0.6 per cent.

Moreover, gross fixed capital formation grew by just 3.7 per cent. Combined with a 4.3 per cent decline in exports and a 1.9 per cent fall in imports.