Indian economy grows 4.8 percent in Q2

New Delhi, Nov 29  Helped by the good performance of the farm and some infrastructure sectors, India’s economic growth recovered marginally to 4.8 percent in the second quarter of the current financial year from 4.4 percent recorded in the previous quarter, government data showed Friday.

According to data released by the Central Statistics Office (CSO) here, the agriculture sector registered healthy growth of 4.6 percent, while manufacturing expanded at a sluggish 1 percent in the July-September quarter.

The country’s gross domestic product (GDP) growth for the first six months of the current financial year stands at 4.6 percent.

This is the fourth consecutive quarter of economic growth below 5 percent. The growth had slumped to 4.4 percent in the April-June quarter.

The quarterly GDP at factor cost at constant (2004-05) prices for the second quarter of 2013-14 is estimated at Rs.13.68 lakh crore against Rs.13.05 lakh crore in the corresponding quarter of last year, translating into a growth rate of 4.8 percent year-on-year, the CSO said.

The economic activities which registered significant growth in during the quarter under review include agriculture, forestry and fishing at 4.6 percent; electricity, gas and water supply at 7.7 percent; construction at 4.3 percent; financing, insurance, real estate and business services at 10 percent and community, social and personal services at 4.2 percent.

The mining and quarrying sector contracted by 0.4 percent; manufacturing grew at a sluggish 1 percent and trade, hotels, transport and communication registered growth of 4 percent year-on-year during the quarter under review.

Reacting on the data, Federation of Indian Chambers of Commerce and Industry (FICCI) president Naina Lal Kidwai said the numbers have exceeded industry expectations.

“It is encouraging to see that the actual numbers have surpassed expectations and we believe this trend will continue,” Kidwai said.

The government expects that the growth in the current financial year will be in the 5 to 5.5 percent range. The Reserve Bank of India (RBI) has pegged the growth during 2013-14 at 5 percent.

However, international agencies and private estimates put the growth much below 5 percent for the financial year ending March 31, 2014.

The International Monetary Fund (IMF) has pegged the growth at 3.75 percent, while the World Bank expects the Indian economy to expand by 4.7 percent this year.

“The growth of GDP at a sub-5 percent level for the fourth consecutive quarter is worrisome,” said Confederation of Indian Industry (CII) director general Chandrajit Banerjee.

He said the two drivers of growth this year – good monsoon and exports – are insufficient to pull the economy out of the present slowdown, as the output of the mining, manufacturing and service sectors remains subdued.

“The problems accruing from low investment and consumption demand, together with high food inflation, are holding back the economy,” Banerjee said.

Arun Singh, a senior economist at Dun & Bradstreet India said the GDP growth would have crossed 5 percent in the second quarter of the current fiscal if government spending had grown as per the previous year’s growth rate.

“The GDP during the second quarter of 2013-14 grew more than market expectations on the back of robust growth in the electricity and agricultural sectors,” Arun Singh said.