The Indian economy grew at a healthy 7.8 per cent in the first quarter of the ongoing financial year as per data released by the National Statistical Office. Growth in the quarter was only marginally lower than the Reserve Bank of India’s most recent estimate — in the August monetary policy committee meeting, the central bank had pegged the economy to grow at 8 per cent. The services sector was the key driver of economic momentum, growing at a robust pace of 10.3 per cent. In comparison, the industrial sector (including construction) grew by just 5.5 per cent. The economic momentum, however, is expected to moderate over the coming quarters.
The disaggregated data shows that within industry, the manufacturing sector remains a source of concern. Last year, the sector had contracted in both the second and third quarter. In the fourth quarter, it had registered a turnaround, growing by 4.5 per cent. Growth in the first quarter of this year has inched only marginally upwards to 4.7 per cent. This is surprising especially considering the fall in commodity prices. The collapse in trade — merchandise exports contracted by 15 per cent in the quarter — could have dragged down the sector. The construction sector, which had seen a steady build up of momentum in the second half of last year, also witnessed a slowdown, growing by 7.9 per cent in the first quarter. In comparison, production of cement and steel rose by 12.2 per cent and 10.2 per cent respectively. On the services side, trade, hotels, transport and communication grew at a healthy pace of 9.2 per cent, as did the financial, real estate and professional services sector, growing at 12.2 per cent.
