NEW DELHI: Economy grew at a faster rate of 8.8 per cent in the first quarter of this fiscal as strong domestic demand resulted in a spurt of manufacturing activity, official data released on Tuesday showed.
The country’s gross domestic product (GDP) had risen 6 per cent in the year-ago period. During the previous quarter (January-March), the economy had expanded by 8.6 per cent. During the three months under review, the manufacturing sector grew 12.4 per cent, trade, hotels, transport and communication activities rose 12.2 per cent, mining and quarrying 8.9 per cent, according to a statement by the Central Statistics Office.
Agriculture, forestry and fishing grew 2.8 per cent over the previous comparable quarter.
Private consumption was estimated to be around
` 996,630 crore in April-June quarter as against ` 788,013 crore in the first quarter of 2009-10 at current prices. "The growth rate is expected to soften in the coming quarters partly reflecting a higher base from the last fiscal and partly due to the lagged effect of the interest rate increase initiated by the Reserve Bank of India
(RBI) in its last policy statement trickling down to the real sectors of the economy," said Mr Shanto Ghosh, principal economist, Deloitte India.
During the quarter, the wholesale price index (WPI) -- the barometer index for measuring price change — rose 10.6 per cent over the same quarter last financial year, with food articles getting costlier by 16.6 per cent, manufactured products by 7.1 per cent and electricity by 7.7 per cent.
The high inflation levels have already forced the Reserve Bank of India to increase key policy rates four times in 2010. The government has predicted the economy to expand 8.5 per cent in the current fiscal, faster than an annual growth of 7.4 per cent in 2009-10. The economy will also have to depend on domestic demand, as exports to India’s traditional offshore markets of Europe and US would taper off with the weakening of the economic recovery there.
"The slowdown in exports arising from the continued nervousness about the recovery in the rest of the world will also pull down the strong growth momentum for the future quarters, although marginally," Mr Ghosh added.
India’s merchandise exports increased 13.2 per cent in July, the slowest pace in six months, in a sign of the effect of world economic slowing.
Reacting to the growth figures, industry bodies expressed confidence that the momentum would be enough to touch the 9 per cent figure for 2010-11.
