Indian economy grew at 7.9 per cent in Q2-FY10: FM

Real gross domestic product (GDP) of the country grew at 7.9 per cent in the second quarter of the current financial year (July-September 2009-10) while the overall macro economic situation points to a turnaround of the economy, finance minister Pranab Mukherjee said today.

Presenting the mid-year economic review in Parliament, the finance minister said overall GDP growth in the first half of the financial year (April-September 2009-10) is now placed at 7.0 per cent.

India's GDP grew at 6.1 per cent in the April-July quarter as per figures released on 31 August 2009, against levels of 5.8 per cent each in the last two quarters of the previous fiscal (Q3 and Q4 of 2008-09).

While agriculture and allied activities decelerated to 0.9 per cent in the second quarter of 2009-10 from a level of 2.7 per cent in the second quarter of 2008-09, the levels of growth in industry at 8.3 per cent (6.1 per cent in Q2 of 2008-09) and services at 9.3 per cent (9.8 per cent in Q2 of 2008-09) indicate the broad based nature of recovery, Mukherjee said. 
 
He said the global economic shock has made an analysis of real GDP based on year-on-year comparisons difficult and hence the reliance on sequential month-to-month and quarter-to-quarter comparisons.

"Even though there was stagnation in the agriculture sector, the sequential quarterly growth rate over the previous quarter of macro indicators confirms recovery of almost the entire economy and having regard to this broad-based nature of growth, the clouds of uncertainty have lifted," Mukherjee said.  

While headline inflation based on the wholesale price index (WPI) remained subdued in the current year, reflecting the base effect and some correction in prices of non-food items, the rising prices of food items (food articles and manufactured food) is a cause of concern, the finance minister said.