India clocks 8.8% GDP growth in Q1
Elephant economy of India is back on track, at least latest stats released by the Government speaks so. In Q1 GDP growth rate touched the impressive 8.8% figure, led by the buoyant 12.4% growth in manufacturing sector.
Finance Minister Pranab Mukherjee addressing the media was very confident to continue this ride on fast track in his fiscal. However the dismal performance of Agriculture sector, the mainstay of more than 60% population, is the big worry, specially when the Monsoon is irregular once again and Northern agriculture belt is facing some drought like condition. Paddy farmers in West Bengal and Bihar is in deep distress and it will definitely hit the large part of the population in coming quarters.
The Inflation control measures are not showing any effect so far and food inflation is still in double digits. This healthy figure will definitely help the statisticians in short run but it will not have any major impact in poll bounded states in coming months.
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.