Friday, November 28, 2008

Indian economy grows by 7.6% in Q2, FM terms it satisfactory

New Delhi, (PTI) Services and construction sectors helped the Indian economy expand at 7.6 per cent in the second quarter of the current fiscal, prompting government to term the growth as "healthy and satisfactory" even though it was the lowest in any three-month period in the last four years.

The economic growth, as measured by expansion in Gross Domestic Product (GDP), may be seen as slowing down as it clocked a 9.3 per cent a year ago, but it was much better than expected by many analysts, given the global financial meltdown.

"This is a satisfactory and healthy growth rate having regard to global slowdown," Finance Minister P Chidambaram told reporters.

For the second half, the economy registered a 7.8 per cent growth rate, compared with 9.3 per cent a year ago, much in line with official projections for 7-8 per cent for the fiscal.

However, analysts said services, which came to the aid of the economy, are expected to slow down in the coming quarters and the Reserve Bank (RBI) and the government must come out with some stimulating measures to perk up the economy.

"Going forward the services sector is likely to slow down, particularly the hotel construction and transport," Crisil Principal Economist D K Joshi said.

Moody's economy.Com said the government and the RBI should come out with stimulating measures to induce growth.

While construction sector grew by 9.7 per cent in the second quarter from 11.8 per cent a year ago, services sectors displayed similar pattern of high growth, though slightly slower than last year.

However, manufacturing grew by just five per cent in the second quarter from 9.2 per cent a year ago and halved to five per cent in the second half from robust 10.9 per cent.

Chidambaram admitted that manufacturing sector remains a problem area. PTI