GDP growth slips to 6.2%

The economy grew 6.2 per cent in the third quarter of 2004-05, significantly below the 11 per cent growth reported in the corresponding quarter in 2003-04.

The dip in the growth rate was primarily due to a steep fall in the agriculture production. In the third quarter of 2004-05, agriculture production fell 1.1 per cent, against a rise of 18.2 per cent in the third quarter in 2003-04.

"The numbers are as expected. The gross domestic product (GDP) would have to grow by over 7 per cent in the last quarter for the economy to grow at 6.9 per cent in the full year," Saumitra Chaudhuri, economic adviser, Icra, said.

The GDP growth, a measure of goods and services produced during April-December 2004-05 was 6.7 per cent, against 8.6 per cent in the first nine months of 2003-04. The central statistical organisation (CSO) had, in the advance estimated released in February, put GDP growth in 2004-05 at 6.9 per cent.

The target can be difficult to achieve. "It is not clear that Q4 was in any way significantly more vigourous than Q3 this fiscal," Ajit Ranade, economist, Aditya Birla group, said.

The index of six major infrastructure sectors, a major component of the index of industrial production, had shown a dip of 0.6 per cent in February, indicating that industrial growth could slow down during the last quarter of 2004-05.

Quarterly GDP at factor cost at constant (1993-94) prices for the third quarter of 2004-05 was estimated at Rs 4,11,907 crore, against Rs 3,87,910 crore in the same period of 2003-04.

The manufacturing sector, however, grew by a whopping 10.4 per cent during the third quarter, against a 7 per cent growth in the corresponding quarter in 2003-04, according to figures released by the CSO.

The trade, hotels, transport and communication sectors also reported double-digit growth (10.5 per cent) in October-December, 2004-05.

"The manufacturing growth rate of 10.4 per cent seems like a slight overestimate. A figure of around 9.5-9.6 per cent seems more credible," Chaudhuri said. In the first three quarters of the fiscal, the manufacturing sector reported 9.2 per cent growth, against 6.7 per cent in the corresponding period in 2003-04.

The construction segment grew 8 per cent against 5.9 per cent in the third quarter last fiscal. The services sectors maintained their growth rates, with the financial services segment growing at 8.1 per cent against 7.3 per cent in the corresponding quarter in 2003-04.

The community, personal and social services segment grew 5.8 per cent against 5.2 per cent recorded in the previous fiscal.