Good news is pouring in like the monsoon rain. The Central Statistical Organisation (CSO) has just revealed that the economy had a remarkable growth in the April-June quarter of the current financial as the gross domestic product (GDP) went up 9.3 per cent over the same quarter last year. The rate of inflation, a major concern for a fast-growing economy, has gone down to a 15-month low of 3.9 per cent. And the Indian banking system is relieved because it was found to be insulated from the US sub-prime crisis that has hit the credibility of many financial institutions in USA and in Europe. To celebrate the good news the country's stock markets have smartly recovered from the battering they suffered in the previous week.
All these clearly show that although India gets the jitters at times from global disturbances, its economy is fundamentally on a strong enough footing to withstand adversities in the long run. Interestingly, the robust growth in GDP was achieved despite a major monetary tightening policy of the government which sponged off liquidity from the system and made funds more expensive.
The other piece of good news is that the agricultural sector, which had a dismal performance last year, made a big contribution to GDP growth with a 3.8 per cent rise in current financial. A significant implication of this is that rise in rural income from the farm sector always results in greater demand for consumer goods and manufactured food products, pushing industrial production up. The 11.9 per cent growth in the manufacturing sector in current financial, a shade lower than last year, thus may get a boost from the farm sector in the coming months. Of course, a robust growth in the service sector, reflecting the trend of economic transformation, lifted the economy to a record high. As the business activities in transport, hotel, telecom, finance, insurance etc are booming, they have led to a major spurt in economic growth. But one aspect that the regulators need to keep an eye and control on, if needed, is the overheating of the economy. Aggressive economic growth must be matched with adequate supply of goods and services. Or else inflation will shoot up again.
