The ongoing growth momentum experienced a set back with Gross Domestic Product (GDP) growth rate during first half of the current fiscal—April to September, 2007—declining to 9.1 per cent as against 9.9 per cent in the previous fiscal.
The decline in the GDP growth rate in the first half of 2007-08 has arisen as a sluggish manufacturing sector pulled down the overall economic growth to 8.9 per cent during the second quarter of the current fiscal— July-September, 2007— from 10.2 per cent in the corresponding period of the last year, latest GDP data released here show.
Finance Minister P Chidambaram while attributing the slower economic growth in second quarter to sluggishness in manufacturing sector, he expressed optimism that the GDP would grow close to nine per cent in 2007-08.
“There is turbulence in the international markets, there is slowdown in world output. We have adopted tight monetary stance. But I am quite confident that economic growth this fiscal will be pretty close to nine per cent,” he told reporters here. Analysis of data shows key manufacturing sector recorded a lower growth of 8.6 per cent during the second quarter of the current fiscal compared to 12.7 per cent in the comparable period of the last year.
Rising rupee
A tight monetary policy of the Reserve Bank of India reducing consumer demand and rupee appreciation dampening exports seem to have pulled down GDP growth rate in the first half of the current fiscal, analysts say.
This is corroborated by the fact that the growth of financial, real estate and business services slowed down to 10.6 per cent in second quarter as against 11.1 per cent a year ago.
However, the construction sector has shown a marginal improvement by recording a growth of 10.9 per cent in the first half of the current fiscal as against 10.8 per cent during the corresponding period previous fiscal.
The growth in transport, communication, trade and hotel sector also slowed down to 11.4 per cent in the second quarter of 2007-08 from high of 14.2 per cent in the second quarter of 2006-07.
