Tags:
Journalism of Courage
Even though the GDP growth rate during the second quarter of 2007-08 showed a decline of 1.3 percentage points as compared to that which was registered for the same quarter the previous year, the growth rate still clocked a high 8.9 per cent.
While GDP growth for the second quarter of 2006-07 touched a high of 10.2 per cent, according to data released today, the year-on-year slow down has been due in part to the sluggish growth of the manufacturing sector.
The sector suffered a fall to 8.6 per cent in the second quarter of the current financial year from previous year’s high of 12.7 per cent in the same period.
Out of the eight sectors, five — including the three service sectors — showed a dip in growth rate with construction remaining at the same level.
This essentially means that the growth of 8.9 per cent was on account of a massive jump in the agriculture and mining sectors.
When asked whether the drop in growth was worrisome, “not at all” was the answer given by Planning Commission’s deputy chairman Montek Singh Ahluwalia, who added that he expected growth for the present fiscal to be between 8.5 per cent and 9 per cent.
Agriculture and allied sector grew by 3.6 per cent as compared to last year’s 2.9 per cent, while mining clocked 7.7 per cent compared to last year’s 3.9 per cent.
Of the three services sectors, hotels, transport and communication dipped to 11.4 per cent; banking, financial and real estate to 10.6 per cent; and community, social and personal services to 7.8 per cent from last year’s 14.2 per cent, 11.1 per cent and 8.3 per cent growth in the second quarter respectively.
Speaking to the reporters today, finance minister P Chidambaram said, “While there was a moderation in growth in the manufacturing sector largely due to subdued performance of the consumer durables sector — sustained high growth in services and construction sectors with some pick up in the growth of agricultural sector maintained growth at the current level.”
While the minister expressed confidence that overall growth for the year would be maintained at 9 per cent, he clarified that this was subject to the “international situation”.
Pointing to increased investment, he said, “With a buoyant capital goods sector and increased construction activities, we can expect capacity additions to remain buoyant in the coming months.”
However, analysts maintain that this decline — attributed to tightening of monetary policy and demand management —should not be given too much importance.
“Overall, the figures reveal a soft landing. The slowdown was expected in subsequent quarters. From extremely high growth levels, it has now reached a sustainable growth level at 8.9 per cent,” said Subir Gokarn, chief economist, Standard & Poor’s Asia-Pacific.
