GDP logs 6.7 per cent growth

Braving global recessionary trends, India managed 6.7 per cent economic growth in 2008-09, compared to high growth rate of 9 per cent in the three previous years, despite the manufacturing sector recording a dismal performance.
A 5.8 per cent growth rate during the last quarter of the fiscal, at a time when most developed economies have shrunk, puts India among the top-most growing nations. The silver lining is that this is a small by significant recovery compared to 5.3 per cent growth rate in the previous quarter indicating the economy is on the recovery path.
The news was cheered by the stock market, which saw an immediate rise in the Sensex by 400 points to touch 14,692.27 at the BSE by mid-day, a level witnessed last in September 2008. The growth rate during 2008-09 is lower than the nine per cent in the preceding fiscal, but that is not as low as expected by certain analysts and quite in the range projected by the RBI at 6.5-7 per cent.

Path of recovery

This improvement in the growth rate in the last quarter indicate that the economy, which is being battered by global slowdown, is already in the path of recovery though at a slow rate, economic analysts say. However, manufacturing growth turned negative at 1.4 per cent in the fourth quarter, pulling down fourth quarter GDP growth to 5.8 per cent from 8.6 per cent a year ago. GDP growth in the third quarter of 2008-09 has been revised to 5.8 per cent from 5.3 per cent estimated provisionally.
For the entire fiscal, manufacturing grew by just 2.4 per cent against 8.2 per cent in 2007-08. Agriculture posted 1.6 per cent growth in 2008-09 against 4.9 per cent in 2007-08, even as it bettered performance in the fourth quarter of the last fiscal to 2.7 per cent against 2.2 per cent in the same period in the previous fiscal.

Improved sectors

Only mining and quarrying, and community, social and personal services showed improved performance in 2008-09 over the previous fiscal.
An official release said “the downward revision in GDP growth rate is mainly on account of lower performance in almost all the sectors excluding construction and community, social and personal services than anticipated.”
The Indian economy grew 7.8 per cent in the first quarter, 7.7 per cent in the second, and 5.8 per cent in the next two quarters each of 2008-09. However, the figures for the first three quarters are revised.
Commenting on the overall low GDP growth rate in 2008-09 former Planning Commission Deputy Chairman Montek Singh Ahluwalia said “this was expected.”
The industry while expressing its optimism over the better-than-expected GDP figures says country’s GDP growth rate at 6.7 per cent in 2008-09 shows resilience of the Indian economy against the background of global recession during the later part of the previous financial year.