India's economy grew at 8.6 per cent in Q4 2009-10

India's economic growth measured in terms of gross domestic product (GDP) accelerated to 8.6 per cent during the last quarter of the 2009-10 fiscal helped by increased spending despite a spike in inflation, data released by the Central Statistical Organisation (CSO) showed.

GDP at factor cost at constant (2004-05) prices in the year 2009-10 is now estimated at Rs44,64,081 crore, against Rs44,53,064 crore estimated earlier on 8 February 2010, showing a growth rate of 7.4 per cent (as against 7.2 per cent in the advance estimates) over the quick estimates of GDP for the year 2008-09 of Rs41,54,973 crore, released on 29 January 2010.

The upward revision in the GDP growth rate is mainly on account of higher performance in 'agriculture, forestry and fishing', 'mining and quarrying' and 'manufacturing', than anticipated.

In the agriculture sector, the third advance estimates of crop production released by the ministry of agriculture showed an upward revision as compared to their second advance estimates in the production of rice (89.31 million tonnes from 87.56 million tones), wheat (80.98 million tones from 79.06 million tones), cotton (228.34 from 223.18 lakh bales of 170 kg. each) and sugarcane (274.66 million tones from 251.27 million tones) during 2009-10. Due to this upward revision in the production, the growth rate in 'agriculture, forestry and fishing' sector in 2009-10 has shown a growth rate of 0.2 per cent, as against the growth rate of (-) 0.2 per cent in the advance estimates.

In the case of 'mining and quarrying', the index of industrial production of mining (IIP-Mining) recorded a growth of 9.7 per cent during 2009-10, as against the growth rate of 8.3 per cent during April-November 2009, which was used in the advance estimates. Due to this increase in the IIP-Mining, the growth rate in GDP is now estimated at 10.6 per cent, as against the advance estimate growth rate of 8.7 per cent.

Similarly, the IIP of manufacturing registered a growth rate of 10.9 per cent during 2009-10, as against the growth rate of 7.7 per cent during April-November, 2009. Due to this increase in the IIP, the GDP of 'manufacturing' sector is now estimated at 10.8 per cent, as against the advance estimate growth rate of 8.9 per cent.

However, the sector 'community, social and personal services' has shown a steep fall in growth rate to 5.6 per cent in the revised estimates, as against the growth rate of 8.2 per cent in the advance estimates, mainly due to greater fall in total expenditure of central government than anticipated (during April-December 2009, the total expenditure of central government showed a rise of 18.5 per cent, which was extrapolated in the advance estimates, whereas the RE 2009-10 showed a rise of 15.6 per cent in this item during 2009-10) and increase in the deflator in terms of consumer price index for industrial workers (CPI-IW) from 11.4 per cent during April-December 2009 to 12.4 per cent during 2009-10. Besides, there is also more fall in the GDP of other activities due to increase in the deflators than anticipated in terms of CPI-IW and wholesale price index.

The sectors which showed growth rates of 5 per cent or more, are 'mining and quarrying' (10.6 per cent), 'manufacturing' (10.8 per cent), 'electricity, gas and water supply' (6.5 per cent) 'construction' (6.5 per cent), 'trade, hotels, transport and communication' (9.3 per cent), 'financing, insurance, real estate and business services' (9.7 per cent), and 'community, social and personal services' (5.6 per cent). The 'agriculture, forestry and fishing' sector, however, registered a growth rate of 0.2 per cent.