GDP growth rises to 7.6%

The construction industry and those in the services sector like trade, hotels, transport and communication pulled up GDP growth to 7.6% in the second quarter of this fiscal. Though the construction industry’s growth at 9.7% was lower than last year’s 11.8%, the trade, hotels, transport and communication group was the only segment among eight classified sectors that maintained a double-digit growth of 10.8%. In view of the global meltdown and poor performance of the manufacturing sector, the government considered the Q2 growth in GDP impressive and hoped that robust growth in the agriculture sector would further pull the overall GDP in the current year. Despite the global meltdown, the fact that the Indian economy grew by 7.8% in the first six months of this fiscal is a good sign, finance minister P Chidambaram said. The FM said the sluggish growth of manufacturing sector remained a matter of concern besides the poor performance of electricity, gas and water supply group. The manufacturing sector grew by 5.3% in the first half of 2008-09 as against the double-digit growth last year. The electricity, gas and water supply group registered a growth of 3.1% compared to 7.4% in the previous year. Chidambaram hoped that the agriculture and allied sector would rebound in the second half of this fiscal after a slowdown witnessed in the first half. Farm sector growth was at 2.9% as against 4.5% last year.M Govinda Rao, member of the PM’s economic panel, said the growth has been better than expected. He cautioned that the slowdown in manufacturing and services sector may impact the growth in the second half of the fiscal though the GDP would grow at 7%. Key indicators like aggregate bank deposits and bank credits have shown growth rates of 19.8% and 24.8% respectively in Q2 over the same period last year. Among the services sectors, railway passenger and freight services have shown growth rates of 12% and 9.9% respectively. In the communication sector, telephone connection—both WLL and cellular—registered a growth of 42.2%.