Staging a small recovery, the economy grew at an estimated 4.8 per cent in the second quarter of the fiscal, helped by “significant growth” in some sectors such as agriculture, select infrastructure, construction, and financing and insurance.
The number is better than the 4.4 per cent in the first quarter — however, the economy continues to struggle, marking a fourth consecutive quarter of less than 5 per cent GDP growth.
Data released by the Central Statistics Office (CSO) on Friday showed that GDP growth stood at 4.6 per cent between April and September, 2013, raising doubts over the finance ministry’s projection of full fiscal growth of between 5 per cent and 5.5 per cent. April-September growth for 2012 was a slightly more buoyant 5.3 per cent.
C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, told The Indian Express: “The data shows a quarter-on-quarter improvement in growth. I expect the economy to perform better in the third and fourth quarters with high rural demand due to the good monsoon and better exports. For 2013-14, GDP growth should touch 5 per cent.” Economic affairs secretary Arvind Mayaram said, “I am glad that it is better than the first quarter ... I believe that going forward in third and fourth quarters, you would see a pick up and growth in the fiscal would be upwards of 5 per cent.”
Most analysts, however, predicted an overall GDP growth of under 5 per cent for the fiscal. “We expect the economy to grow at 4.9 per cent in 2013-14,” Devendra Kumar Pant, chief economist at India Ratings, said. He added that there is a silver lining to the data on the expenditure side.
Gross fixed capital expenditure — a measure of investments — turned positive, and grew at 2.6 per cent in the second quarter after falling by 1.81 per cent in the April-June quarter. Net exports too showed a sharp uptick, helping demand side GDP growth to outpace supply side expansion of the economy.
Prospects of subdued growth, however, appear unlikely to take the Reserve Bank of India away from its main focus of controlling inflation when it makes its mid-quarter policy announcement on December 18.
The good monsoon helped expand farm sector output by 4.6 per cent in July-September compared to 2.3 per cent in the previous fiscal. It also helped replenish hydroelectric reservoirs, taking electricity, gas and water supply production to 7.7 per cent in Q2.