New Delhi: The economy clocked 7.9 percent
growth for the second quarter of 2009-10, surprising the
government, the Reserve Bank of India, analysts alike and the
stock markets saluted the performance with a near 300-point
rise in the Sensex on Monday.
Consequently, the economy grew by seven per cent for the
first half, shaking the forecasters out of conservatism and
prompted RBI, Plan panel and the government to say growth
projections may be revised upwards. Hitherto, the growth for
second quarter at every official level was pegged at around
six per cent.
Riding the strong manufacturing growth of 9.2 per cent
and services sector performance, the economy grew much higher
than 6.1 per cent in April-June quarter and 7.7 per cent in
the second quarter of last fiscal.
"Taken together, the two quarters, I do hope it would be
possible to achieve seven per cent plus (growth rate), but it
is still too early to predict. I will wait for the third
quarter figures," Finance Minister Pranab Mukherjee said.
The performance should end the debate on the direction of
growth amid the adverse impact of weather on farm sector which
grew by just 0.9 per cent during the quarter, and the RBI and
government should now focus more on taming the inflation,
particularly surging food prices, a top economist said.
"This (7.9 per cent) has turned out to be more positive
than one has expected...RBI's monetary policy would now be
more focused on inflation," Prime Minister's Economic Advisory
Council Chairman C Rangarajan, who had earlier predicted a
near 6 per cent growth for the quarter, said to a news agency.
While the rest of the economies merely managed to come
out of recession in July-September period, Indian economic
growth was second only to China, which grew by 8.9 per cent.
With this performance, RBI, the Planning Commission and
the Prime Minister's Economic Advisory Council are all set to
revise upwards their growth projections.
While the Reserve Bank had predicted the growth rate of 6
per cent, Plan panel expected it to be 6.3 per cent and PMEAC
pegged it at 6.5 per cent this fiscal.
"...we will have to review forecast for the year as a
whole," RBI Feputy Governor Subir Gokarn said.
Planning Commission Deputy Chairman Montek Singh
Ahluwalia said the strong Q2 numbers suggest that there may
have to be revision in growth target, suggested so far.
"Overall growth of 6.5 per cent may have to be revised
upward," Rangarajan said.
With this, economists said the Government might mull
withdrawing stimulus as its exchequer is getting a hit. The
Centre's deficit has already more than doubled to Rs 2.45 lakh
crore in the first seven months of 2009-10 over the comparable
period last fiscal.
However, Ahluwalia said exit strategy should be looked at
close to February.
PTI
First Published: Monday, November 30, 2009, 23:40