GDP grows 4.8 pc in Q2; fiscal deficit, inflation up

After hitting a four-year low in the first quarter, the economy grew by a higher-than-expected 4.8 per cent in the September quarter on an uptick in agriculture and factory output, although a rise in the fiscal deficit and inflation dampened sentiment.
Gross domestic product or GDP rose 4.8 per cent in July-September compared with 4.4 per cent in the previous quarter, according to an official statement here.
The July-September period was the fourth successive quarter of economic growth below 5 per cent and compared with 5.2 per cent expansion in the same period last year.
While Finance Minister P Chidambaram exuded confidence that the growth rate will rise to 6 per cent next fiscal, Economic Affairs Secretary Arvind Mayaram said the third and fourth quarters will see a pick up to help attain at least 5 per cent growth for the fiscal.

The recovery in the July-September quarter was dampened by an increase in retail inflation for industrial workers to 11.06 per cent, strengthening the Reserve Bank's case for an interest-rate hike to fight rising prices.
Stating that there were "no quick fixes" for taming prices, Chidambaram said inflation has got entrenched and monetary policy has little impact on it.

While the Finance Minister has said the "red lines" on fiscal deficit will not be breached, the difference between government receipts and spending touched Rs 4.57 lakh crore, or 84.4 per cent of the budget estimate, in the first seven months of the current fiscal.

The rupee weakened 0.1 per cent to 62.4487 per dollar while the 30-share Sensex rose 1.3 per cent.
Recovery in Asia's third-largest economy has been wobbly as the RBI raised interest rates to curb inflation. There are expectations of another hike at the central bank's next review due on December 18.
Blaming the growth slowdown on global factors, Prime Minister's Economic Advisory Council Chairman C Rangarajan said, "I am optimistic that the second half will be spurred along by increased manufacturing, leading to a more stable rupee.