Braving the global recessionary trends, India managed 6.7 per cent economic growth in 2008-09 despite the manufacturing sector recording a dismal performance.
A 5.8 per cent growth rate during the last quarter of the fiscal, at a time when most developed economies have shrunk, puts India among the top-most growing nations.
The news was cheered by the stock market, which saw an immediate rise in the Sensex by 400 points to touch 14,692.27 at the BSE by mid-day, a level witnessed last in September 2008.
Commenting on the growth figures released by the government today, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, "It is on the expected lines."
The growth rate during 2008-09 is lower than the nine per cent in the preceding fiscal, but that is not as low as expected by certain analysts and quite in the range projected by the RBI: 6.5-7 per cent.
However, manufacturing growth turned negative at 1.4 per cent in the fourth quarter, pulling down Q4 GDP growth to 5.8 per cent from 8.6 per cent a year ago.
GDP growth in the third quarter of 2008-09 has been revised to 5.8 per cent from 5.3 per cent estimated provisionally.
When asked whether declining manufacturing output calls for another stimulus package from the Government, the Prime Minister's Economic Advisory Council Chairman, Suresh Tendulkar, said the Budget is expected to address growth concerns.Crisil Principal Economist D K Joshi said the Government may first see how the impact of the previous stimulus packages pan out.
Finance Minister Pranab Mukherjee had said that bringing the economy to a high growth path is the priority of the Government.
Chief Statistician Pronab Sen said he did not expect another stimulus package right now.
However, compared to the previous fiscal, economic growth did exhibit a slowdown, triggered by sluggish manufacturing due to slackening demand. In fact, sharp decline in demand overseas has led to shrinking exports since October.
For the entire fiscal, manufacturing grew by just 2.4 per cent against 8.2 per cent in 2007-08.
Agriculture posted 1.6 per cent growth in 2008-09 against 4.9 per cent in 2007-08, even as it bettered performance in the fourth quarter of the last fiscal to 2.7 per cent against 2.2 per cent in the same period in the previous fiscal.
Only mining and quarrying, and community, social and personal services showed improved performance in 2008-09 over the previous fiscal.
Community, social and personal services grew 13.1 per cent in 2008-09 from 6.8 per cent in the previous fiscal, driven by the pay hikes of government employees.
Mining and quarrying was up by 3.6 per cent from 3.3 per cent.
Electricity, gas and water supply as well as other services sectors grew less promisingly in 2008-09, at 3.4 per cent, from 5.3 per cent in 2007-08.
Construction growth was 7.2 per cent in the last fiscal against 10.1 per cent in 2007-08, though it posted the same growth rate in the fourth quarter at 6.8 per cent.
The Central Statistical Organisation had pegged GDP growth at 7.1 per cent for 2008-09 in its advance estimates.
An official release said, "The downward revision in the GDP growth rate is mainly on account of lower performance in almost all the sectors excluding construction and community, social and personal services than anticipated."
The Indian economy grew 7.8 per cent in the first quarter, 7.7 per cent in the second, and 5.8 per cent in the next two quarters each of 2008-09. However, the figures for the first three quarters are revised.
Goldman Sachs said fourth-quarter GDP figures are higher than the market's and its own expectations.
It said Government consumption, which grew 22 per cent year-on-year, was the largest contributor to the boost in growth.D K Joshi also said high government spending has resulted in good GDP numbers.
Given the low inflation figure at 0.61 per cent, will the RBI come out with more monetary stimulus to boost manufacturing? Experts are divided on the issue.
While Joshi said the RBI is expected to continue with its soft monetary stance and may cut the repo rate by 50 basis points, Tendulkar said a cut in policy rates by the central bank will not help the economy much.
Joshi expects India's economy to grow between 5.5 and 6 per cent in the current fiscal and Goldman Sachs saw upside risks to its GDP estimates of 5.8 per cent.
Goldman Sachs also said, "Going forward, we expect activity to pick up in the second half of 2009-10."
