The growth rate during the period depicts India as the second fastest growing large economy after China, which had registered a growth of 9.6 per cent in the September quarter.
Driven by robust farm output and services sector growth in the second quarter, the gross domestic product (GDP) grew by 8.9 per cent during the first half of the current fiscal.
The Central Statistical Organisation (CSO) also upped the GDP growth of first quarter (April-June) to 8.9 per cent, from 8.8 per cent earlier.
The revision is on account of the new base year adopted in the calculation of inflation and industrial output.
The numbers prompted Finance Minister Pranab Mukherjee to say “amid all the depressing news there is a good news” and also exude confidence of the economic expansion to be over 8.75 per cent.
“We may be confident that at the end of this year the GDP growth will not be less than 8.7-8.75 per cent... It may be more,” Mukherjee said.
The government as well as the Reserve Bank of India (RBI) had earlier estimated the economy to grow by around 8.5 per cent in the current fiscal, up from 7.4 per cent in 2009-10.
High numbers also prompted the Finance Ministry advisor to be positive on the economic expansion in the current fiscal.
“It is not impossible any more. We are very close to that,” Chief economic advisor (CEA) Kaushik Basu said to a query on whether the economy will grow by 9 per cent in the current fiscal. During the second quarter, the farm sector recorded a growth rate of 4.4 per cent, up from 0.9 per cent in the corresponding period a year ago. The growth in the sector has been higher than the level of 2.5 per cent in the April-June quarter.
The manufacturing sector during the second quarter grew at a rate of 9.8 per cent as compared to 8.4 per cent during the same period last year. However, the 9.8 per cent growth in manufacturing in Q2 was slower than 13 per cent recorded in Q1.
The QoQ (quarter over quarter) slowdown in manufacturing was expected as the factory output has been declining on a monthly basis.
Factory output growth declined the most in 16 months to 4.4 per cent in September, reflecting a general slowdown in demand across sectors.
The QoQ (quarter over quarter) slowdown in manufacturing was expected as the factory output has been declining on a monthly basis. This is on the back of the successive monetary tightening moves by the RBI to rein in high inflation.
In the previous month as well, the industrial production expanded at a sluggish pace of 6.91 per cent, sharply down from 14.99 per cent in July. As such, factory production grew by 8.69 per cent in the second quarter of this fiscal.
GDP growth slowed to 6.7 per cent in 2008-09 from 9 per cent in the previous three financial years due to global economic meltdown. However, government’s stimulus packages and stepped-up public spending helped push growth to 7.4 per cent in Financial year 2009-10.
The Planning Commission is sticking to its original 8.5 per cent economic growth forecast for 2010-11 financial year, with Principal Advisor Pronab Sen indicating this is a more feasible scenario than the 9 per cent expansion predicted by some experts. “I think 8.5 per cent GDP growth in 2010-11 looks more feasible,” he said when asked whether the country can achieve economic expansion of 9 per cent with upward bias this fiscal.