Indian economy grows faster than expected

India's economy grew at a much faster pace than anticipated in the second quarter of the current fiscal year, prompting a recovery in the stock market and lifting hopes of meeting the Government's annual target of 8.75%. India's economy expanded by an impressive 8.9% in the July to September quarter as against 8.7% in the same period of the previous fiscal year, the Commerce & Industry Ministry said. Meanwhile, the GDP figure for the April to June 2010-11 period was revised to 8.9% versus a preliminary estimate of 8.8%. The consensus estimate was for a GDP growth of 8.2-8.3% in the second quarter of FY11 with the broad range of 8-8.5%.



The Agriculture sector registered a strong growth of 4.4% in Q2 FY11 versus 0.9% in the corresponding quarter of FY10. The Manufacturing sector grew by 9.8% in Q2 FY11 as against 8.4% in the second quarter of the last fiscal year. The Construction sector clocked a growth of 8.8% in Q2 FY11 versus 8.3% in the same quarter a year earlier. Mining sector growth stood at 8% compared to 10.1% in the second quarter of the last fiscal year.

Growth in Electricity/Gas/Water segment stood at 3.4% in Q2 FY11 versus 7.7% in Q2 FY10 while in Trade/Hotels/Transport/ Communications the same was at 12.1% versus 10.2%. Growth in Finance/Insurance/Real Estate came in at 8.3% as against 11.3% in the year-ago period while growth in Community/Social Services fell to 7.3% from 14%.

Quarterly GDP at factor cost at constant (2004-05) prices for Q2 FY11 stood at an estimated Rs. 11,46,637 crores as against Rs. 10,53,057 crores in Q2 FY10. GDP at factor cost at current prices in Q2 FY11 is estimated at Rs. 16,64,088 crores as against Rs. 14,01,815 crores in Q2 FY10, showing an increase of 18.7%.

The wholesale price index (WPI), in respect of the groups - food articles, fish, minerals, manufactured products, electricity and all commodities, has risen by 16.3%, 35.6%, 13.6%, 5%, 6.1% and 9%, respectively during Q2 FY11, over Q2 FY10. The consumer price index (CPI) for industrial workers has shown a rise of 10.3% during Q2 FY11 over Q2 FY10.

The estimates of Quarterly GDP for FY09, FY10 and Q1 FY11 have been revised on account of using the new series of WPI with base 2004-05 and also subsequent revision in Index of industrial production (IIP) from April 2008.