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NEW DELHI, Dec. 31

THE Indian economy has registered a dismal growth rate of 4.9 per cent during the first half of the current fiscal. According to the Central Statistical Organisation (CSO), the 4.9 per cent year-on-year increase in real gross domestic product (GDP) at factor cost during April-September 2001 has been below the corresponding growth of 6.1 per cent recorded in April-September 2000.

Among the major sectors of the economy, the growth rates for both industry and services have been lower, at 2.3 per cent and 6.8 per cent respectively, during the first half of 2001-02, compared to the corresponding figures of six per cent and 8.6 per cent for the previous fiscal.

While within industry, all the three sub-sectors (manufacturing, mining and electricity) have registered in a drop in growth, in the case of services, the growth rate has been higher for `financing, insurances, real estate and business services', while declining sharply in the other three sub-sectors - `construction', `trade, hotels, transport and communications' and `community, social and personal services'.

A clear pattern emerges here: the recessionary trends in the economy, which were earlier confined mainly to industry (particularly manufacturing), have now spread to the services sector as well. And within the latter, it is construction and commerce (trade, hotels, transport and communications) that are especially feeling the heat as of now.

Given that the bulk of jobs in the services sector (for both skilled as well as unskilled workforce) are created by construction and commercial activities, the distinct slump in these two sub-sectors does not spell particularly good news.

There has been a slowdown in `community, social and personal services', too, although the growth rate for the first half has been quite respectable at 6.1 per cent. And this, in turn, has probably to do with the fact the sub-sector includes Government services, the growth of which is measured by increase in spending levels.

Thus, a higher fiscal deficit or runaway increase in spending (even on non-Plan heads or salaries) translates into higher growth rates for this segment.

As for the continued buoyancy is the financial sector, analysts attribute this mainly to the 17.6 per cent growth in bank deposits during April-September 2001 over the same period of the previous year.

This again may be reflective not of a financial boom, as much as diminishing investment opportunities and the drying up of alternative avenues for savings, forcing corporates and individuals to park their surplus funds predominantly with banks.

While credit offtake from banks has gone up by 12.7 per cent, most of this growth has, however, come from borrowings by Government agencies for foodgrain procurement.

The only saving grace has been the agriculture sector, which has recorded a growth rate of 2.8 per cent during April-September 2001, as against 0.6 per cent in the first half of the previous fiscal. The timely arrival and reasonably benign spatial and temporal distribution of the south-west monsoon has ensured a decent kharif harvest this time, with production of rice, pulses, oilseeds and cotton registering rates of 2.7 per cent, 12.2 per cent, 8.3 per cent and 31 per cent. On the other hand, the growth rates were only 0.4 per cent for coarse cereals and minus 6.8 per cent for sugarcane.

With acreages under most crops increasing significantly in the ongoing rabi season as well, there is every possibility of the agriculture sector growing by around seven per cent during 2001-02 as a whole.

This should, on the whole, result in an overall economic growth of five per cent during the current fiscal, which the Government can hail as being ``not too bad'' under the current not-so-favourable internal and global environment.

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