The Hindu Business Line : Manufacturing, services fuel 9.2 pc growth in Q2

The Indian economy has continued to post robust growth figures with the Central Statistical Organisation (CSO) reporting 9.2 per cent growth in July-September 2006. This was mainly on the strength of the performance of the manufacturing and services sector. The growth rate in the corresponding quarter last year was 8.4 per cent, while the 2006-07 first quarter growth was put at 8.9 per cent.

On the basis of two consecutive good performances, the economy's first half growth in the current fiscal touched 9.1 per cent compared with 8.5 per cent in the corresponding period last year.

"For the years that we have quarterly figures and by inference even to the previous years, this is the highest first half GDP growth ever since 1991-92," Mr P. Chidambaram, Union Finance Minister, told newspersons in his reactions to the second quarter GDP estimates released by the CSO here on Thursday.

For the first six years after economic reforms began in 1991, the GDP was calculated only on an annual basis. It is only from 1997-98 that GDP is calculated on quarterly basis.

Asserting that the GDP growth achievements so far in the current fiscal are not an accident, as some tend to believe, Mr Chidambaram highlighted that all sectors, other than agriculture and mining, have done better in the second quarter than their first quarter performance.

"If we look at the quarterly figures alone, there has been only two quarters in the past when the growth rate was more than 9.2 per cent — fourth quarter of 2005-06 (9.3 per cent) and third quarter of 2003-04 (11.3 per cent)... ," Mr Chidambaram said.

Asked to comment on the expected annual GDP growth for the current fiscal, if the current trend were to be maintained in the remaining quarters, Mr Chidambaram said that there is "no limit to my expectations".

He concurred with the Reserve Bank of India stance that it would be premature and wrong to say that the economy was "overheating".

The Finance Minister said that the overall tax collections had grown by 30 per cent and that the Government was on target to meet the revenue deficit and fiscal deficit budget estimates.

Revenue deficit of the Centre up to end-October 2006 stood at Rs 67,299 crore compared with Rs 70,284 crore in the corresponding period last year. Fiscal deficit up to end-October 2006 stood at Rs 87,100 crore (Rs 92,068 crore).

The Finance Minister also said that the only "worrying factor" was the slightly higher inflation, which he felt was largely driven by supply side constraints. "With better supply side management and the new sugar arriving and the new crop of wheat that is expected early next year, I am confident that inflation can be tamed," he added.

Highest growth

The highest GDP growth recorded by the Indian economy was in 1988-89 when it touched 10.5 per cent. However, this momentum could not be continued in the coming years as fast changing political developments in the country brought down the growth rate to 6.7 per cent in 1989-90 and 5.6 per cent in 1990-91.

The rate plummeted to 1.3 per cent in 1991-92, requiring strategic economic management by the then Finance Minister, Dr Manmohan Singh, who introduced eco<147,1,7>nomic reforms mid-way that year.