Belying concerns of a slowdown, the country’s economy grew at a higher-than-expected rate of 9.3 per cent in the first quarter this fiscal on robust manufacturing and services sector, although a few analysts said the pace may be difficult to sustain in coming quarters.

The GDP growth was driven by manufacturing, construction and services sector. Even the agriculture sector, a key area of concern for the government, rose by nearly four per cent. The high growth in the first quarter comes on a base of 9.6 per cent in the same quarter last fiscal and on top of 9.4 per cent expansion during 2006-07, the fastest in 18 years. The first quarter growth is higher than RBI’s projection of 8.5 per cent for the entire fiscal and IMF’s estimate of 9 per cent during 2007. The economy has averaged a growth of 8.6 per cent in the last four financial years.

Market sentiments
High growth rate would have usually pushed up inflation but RBI’s tight monetary policy and government’s fiscal steps pulled the rate at a 15-month low of 3.94 per cent.

This also boosted stock market sentiments with the benchmark Sensex rising nearly 200 points. The rupee also gained 28 paise against the dollar on strong equity markets. Planning Commission Deputy Chairman Montek Singh Ahluwalia said, “Growth has widely been expected to fall. RBI has expected an 8.5 per cent growth for the year. So, 9.3 per cent growth is good.”  The GDP growth for this fiscal, the first year of the 11th five-year plan, is expected to be 8.5-9 per cent. “If this rate is sustained, it will be considered good,” he said.

ALL ROUND BUOYANCY
FM gung-ho on 9% growth

New Delhi, PTI: Encouraged by the 9.3 per cent GDP growth during April-June period and inflation falling below 4 per cent, Finance Minister P Chidambaram, on Friday, expressed confidence that economy will expand by around 9 per cent in the full fiscal and investments will remain buoyant.

“Although provisional estimates of 9.3 per cent GDP growth during first quarter are a shade below than the growth last year (in corresponding period), but given the circumstances on account of external situation, it is quite satisfactory,” Mr Chidambaram told reporters here.

“As long as savings are high, capital formation remains high, it supports the hypothesis that investment will remain buoyant. I am confident that GDP growth rate will remain close to 9 per cent this year as well,” he said. It will ultimately help to revise the average GDP growth of 8.6 per cent over the past three years, he added. Stating that the last few months had been of tightening monetary policy, he said government would make every effort to see that investment remains buoyant and credit to productive sectors would be ensured despite tight monetary policy.

Chidambaram also said sectors like electricity, water and sanitation showed better performance by achieving 8.3 per cent growth in first quarter this year against 5.8 per cent a year ago.