India’s gross domestic product (GDP) moderated to 8.9 per cent, the lowest in the last 12 months, largely due to sluggish growth in manufacturing but a confident government felt the full-year growth rate would be close to 9 per cent.
Latest official data released by the Central Statistical Organisation (CSO) showed that the GDP grew by 8.9 per cent during the three months ended September, down from the previous quarter’s 9.3 per cent. GDP had grown by a blistering 10.2 per cent in the same quarter of 2006-07.
For the first six months of the current fiscal year, the GDP grew by a robust 9.1 per cent.
Finance Minister P Chidambaram attributed the moderation to poor manufacturing growth, but exuded confidence that full-year growth would still be very close to 9 per cent.
“There is turbulence in the international markets, there is a slowdown in world output and we have adopted a tight monetary stance. Commodity prices are high and crude oil prices are high. All this points to some moderation. But I am quite confident that economic growth this fiscal will be pretty close to 9 per cent,” Chidambaram said.
The data showed that private final consumption expenditure grew by 55.2 per cent, while the gross fixed capital formation was 30.3 per cent during the quarter, up from 28.6 per cent in the same quarter last year and a reflection of higher investment driving the overall growth process.
Chidambaram termed high gross fixed capital formation and a strong farm sector growth rate of 3.6 per cent as upsides for the economy.
“It (high gross fixed capital formation) means that investment continues to be the driver of growth, the capital goods and the construction sectors are buoyant,” he said, and added that wheat production was expected to be 1 million tonnes higher than the previous year and agriculture growth was expected to remain close to the target 4 per cent.
The Prime Minister’s Economic Advisory Council (EAC) C Rangarajan has projected the economy will grow by 9 per cent in 2007-08 and the Reserve Bank of India estimates it at 8.5 per cent.