Q3 GDP slows to 6% on poor rains

India’s GDP grew by 6% in October-December quarter as against expectations of a 6.9% expansion, data released by the Government showed. India's GDP growth was 7.9% and 6.1% in Q2 FY10 and Q1 FY10, respectively. In the third quarter of the fiscal 2008-09 stood at 6.2%. Reacting to the latest GDP numbers, Finance Minister Pranab Mukherjee said that India's agriculture sector must grow by 4% a year to sustain a high GDP growth target of 9% for the economy in the medium term.

The slowdown in the third quarter was primarily due to a 2.8% fall in agriculture production and a 2.2% drop in community, social and personal services. The fall in the growth of community, social and personal services was mainly on account of high base in Q3 of FY09, following the implementation of Sixth Central Pay Commission’s recommendations, the CSO said.

The manufacturing sector continued its upward march, expanding by 14.3% as against 1.3% in the same period last year. Growth was also strong in sectors such as services, construction, mining and electricity.

Official CSO estimates have pegged the economic growth in FY10 at 7.2%. To achieve the target, the economy would have to grow by faster rate in the fourth quarter. Final GDP figures for FY10 may turn out to be higher, Finance Minister Pranab Mukherjee said while announcing the Union Budget.

Planning Commission Deputy Chairman, Montek Singh Ahluwalia, said the third quarter GDP growth reading was on expected lines and he was hopeful of 7.2% growth this fiscal year. Following the global crisis, India’s growth slipped to 6.7% during FY09 from over 9% during the previous three years.