At 8.9%, Q1 growth highest since 2000-01. |
A strong showing in services and manufacturing saw the Indian economy beat all forecasts with 8.9 per cent growth during the April-June quarter, its highest first-quarter growth rate since 2000-01. |
Cheering the data, the BSE Sensex rose 73.68 points, or 0.60 per cent, to close at 12,454.42. |
Even as Finance Minister P Chidambaram said a combination of reform and discipline could enable the economy to sustain growth rates of more than 8 per cent in the coming quarters, data released elsewhere suggest buoyant growth prospects for the economy, fears of a slowdown in the US next year notwithstanding. |
The rate of inflation fell to 4.56 per cent for the week ended September 16 from 4.61 per cent in the previous week. |
Chidambaram said his target was to drive it below 4 per cent, which could lead to easing of interest rates in the days to come. |
The Reserve Bank of India (RBI), which raised its key short-term interest rate thrice during 2006 to cool the economy and check inflation pressures, next reviews policy on October 31. At its last review in July, the RBI increased rates by a quarter of a percentage point to 6 per cent. |
Data released by the RBI show the current account deficit rose sharply to $6.1 billion in April-June from $3.55 billion in the same quarter of the previous year, though the spurt was mainly on account of the rising oil import bill. |
A National Sample Survey report says there has been an improvement in the country's overall employment rate, which increased to 42 per cent during July 2004-June 2005 from around 39 per cent during January-June 2004. |
"I am confident the GDP will grow by at least 7.5 per cent every quarter now and even touch 8 per cent if we follow prudent policies and fiscal discipline," Chidambaram said. |
Economist Omkar Goswami said the data was a "wonderful example of how great economics and entrepreneurial opportunity can temporarily overcome non-existent governance". He estimated growth for the full year at between 8 per cent and 8.2 per cent. |
Ajit Ranade, chief economist, Aditya Birla Group, said the figures were slightly better than expected. Stating that growth in the latter half might be slightly lower, he estimated full year growth at around 7.5 per cent. |
Chidambaram attributed the robust first quarter GDP growth to a 31 per cent rise in bank credit, a 36.2 per cent growth in commercial vehicle production, a 32.2 per cent increase in civil aviation passenger traffic and a 48.9 per cent increase in telephone connections. |
The services sector grew by 10.6 per cent, while agriculture grew by a flat 3.4 per cent. Except for electricity and construction, which slowed down to 5.4 per cent and 9.5 per cent from 7.4 per cent and 12.4 per cent, respectively, every sector recorded an acceleration in growth. |
For 2005-06, the country's GDP grew by 8.4 per cent. The RBI has forecast a growth of 7.5-8 per cent for the current financial year. |
The prime minister's Economic Advisory Council has projected a 7.9 per cent growth rate, while the Asian Development Bank has estimated growth at 7.8 per cent for the year. |