Financial Daily from THE HINDU group of publications
Thursday, Jan 01, 2004
Industry & Economy - Economy
GDP growth surges 8.4% in Q2 Strong performance in a decade aided by farm, industry
New Delhi , Dec. 31
THE economy appears to be on the upswing, with the gross domestic product having registered a growth of 8.4 per cent in the second quarter (July-September) of the current fiscal, against 5.2 per cent in the corresponding quarter last fiscal, thanks to bumper agriculture production coupled with improved performance by industry.
This is for the first time in close to a decade that that economic growth has exceeded the 8 per cent mark.
This high growth is expected to accentuate the "feel-good" factor with the booming stock markets and burgeoning foreign exchange reserves with high inflow of foreign capital, both direct and portfolio investments.
As per the latest estimates of GDP released by the Central Statistical Organisation (CSO), GDP at factor cost at constant (1993-94) prices for Q2 of 2003-04 is estimated at Rs 3,23,414 crore, against Rs 2,98,345 crore in Q2 of 2002-03.
After a comparatively good monsoon, agriculture, which is expected to register a double-digit growth during the year, witnessed a growth of 7.4 per cent in Q2, against a fall of 3.5 per cent in the same quarter last year. The other sectors that saw significant growth in Q2 were construction (6.4 per cent), trade, hotels, transport and communication (11.9 per cent), financing, insurance, real estate and business services (7.3 per cent) and community, social and personal services (8.9 per cent).
Low growth rates were recorded by mining and quarrying at 2.3 per cent and electricity, gas & water supply at 2.9 per cent.
In agriculture, production of rice went up by 12.8 per cent, coarse cereals by 38.9 per cent and pulses by 41.7 per cent during the kharif season. Among commercial crops, production of oilseeds is expected to rise by 63.6 per cent, cotton by 40.9 per cent and sugarcane by 6.2 per cent.
According to the latest estimates available on the index of industrial production (IIP), the index of mining rose 3 per cent, manufacturing 7.3 per cent, and electricity 1.9 per cent. The key indicators of the construction sector - cement and steel - registered growth rates of 5.4 per cent and 8.3 per cent respectively.
Among the services sectors, the net tonne kilometres of the railways grew 4.7 per cent, and of passengers by 4.1 per cent. The production of commercial vehicles rose 52.7 per cent, cargo handled at major ports 7.6 per cent, aggregate bank deposits 11.4 per cent, bank credits 10.7 per cent and total revenue expenditure (non-Plan) of the Union Government 25.3 per cent.
With this growth performance, the record book for the first half of the current fiscal (April-September) appears equally rosy. GDP has been pegged at 7 per cent, against 5.2 per cent in H1 last year.
The agriculture sector rebounded with a 4.1 per cent growth during the first half of 2003-04, against nil growth in the same period last fiscal.
Manufacturing sector clocked a steady 6.8 per cent growth during the first half of this fiscal compared with 5.2 per cent in April-September 2002. However, it was services like trade, hotels, transport and communication that stole the show with a growth of 10.7 per cent in the first half this fiscal compared with 7.5 per cent in the same period last year. Financing, real estate and business services also improved its performance to 7.2 per cent in the first half of this fiscal from 6.8 per cent in the year-ago period.
During the first half, however, the growth in community, social and personal services sector was lower at 6.7 per cent compared with 7.4 per cent during April-September 2002. Growth in mining sector slowed down to 2.7 per cent compared with 6.8 per cent in the same period last fiscal. Electricity, gas and water supply registered slower growth of 3.8 per cent, against 4.2 per cent.
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