Sizzling GDP growth ushers New Year

Second quarter growth of 8.4% among the fastest in the world

The economy grew an unexpectedly robust 8.4 per cent in the second quarter of 2003-04, making it one of the fastest growing in the world, with analysts seeing stronger expansion in the coming quarters.

Driven mainly by trade, services, agriculture and manufacturing, the GDP at factor cost at constant prices during July-September 2003 was Rs 323,414 crore, against Rs 298,345 crore in the corresponding period of 2002.

The figures released by the Central Statistical Organisation (CSO) today showed that the GDP growth in the first half of the fiscal was 7 per cent, and if industrial recovery continues as expected, the first year of the Tenth Plan could record the targeted 7 per cent growth rate.

The highest annual GDP growth at factor cost (at 1993-94 prices) was recorded in 1998-99 at 10.5 per cent, followed by 9 per cent in 1975-76.

"With a 5.7 per cent growth in the first quarter, the second and third quarters will have to grow at over 8 per cent for the economy to clock 7 per cent growth in 2003-04," said Crisil Chief Economist Subir Gokarn.

The impressive turnaround in the economy was spearheaded by an 11.9 per cent growth in trade, hotels, transport and communication, which at Rs 83,495 crore accounted for 26 per cent of the GDP. "The second quarter growth in this segment is an all-time high," said ICRA Economic Adviser Saumitra Chaudhuri. This segment had grown 8.1 per cent in the second quarter of 2002-03.

Agriculture, which at Rs 57,033 crore contributed 17.6 per cent of the GDP, grew 7.4 per cent during July-September 2003, against 3.5 per cent in the corresponding period last year. "The swing in agriculture is as expected. It is a good estimate of how the sector will perform this year," said Gokarn.

A rise in agricultural income has led to an increased demand for manufactured products, pushing up manufacturing growth to 7.3 per cent from 6.5 per cent in the same quarter last fiscal.

Construction, mining and electricity were the only sectors to grow at less than 7 per cent. While the construction sector grew 6.4 per cent in the second quarter this fiscal, against 8.6 per cent in the same quarter last fiscal, the growth in the mining sector was down to 2.3 per cent and electricity to 2.9 per cent.

Driven by a 25.3 per cent growth in non-Plan revenue expenditure, the community, social and personal services sector grew 8.9 per cent, while financial services reported a 7.3 per cent growth during the quarter. These sectors had grown 7.8 per cent and 7 per cent, respectively, in the same quarter last year.

Among the services sectors, key indicators like production of commercial vehicles grew 52.7 per cent, cargo handled at major ports 7.6 per cent, aggregate bank deposits 11.4 per cent and bank credits 10.4 per cent.

The GDP at factor cost at current prices in the second quarter of 2003-04 is estimated to climb 11.5 per cent at Rs 565,118 crore from Rs 506,720 crore in the same period last fiscal.