New Delhi, Dec. 31: The economy grew at a sizzling 8.4 per cent in the second quarter of 2003-04, beating analysts expectations and driven by a strong rise in farm output and robust inputs from other sectors.
Data released by the Central Statistical Organisation showed the pace of growth in the July-to-September quarter is the country’s best in over a decade, and slightly behind rival China’s 9.1 per cent growth, which pitchforks it into the league of the fastest growing economies of the world.
Earlier, the Reserve Bank of India and the government had forecast a full-year growth between 6.5-7 per cent, which now looks conservative in the face of the robust second quarter growth. Some private economists and industry bodies, however, estimated an 8 per cent full-year growth.
The farm sector rose, year-to-year, 7.4 per cent helped by the best monsoon in a decade, while manufacturing reported a 7.3 per cent rise during the period against a 6.4 per cent growth in the year-ago period.
Quarterly GDP at factor cost at constant prices (1993-94) for the second quarter of 2003-04 has been estimated at Rs 3,23,414 crore as against Rs 2,98,345 crore in the same period of 2002-03, showing a growth rate of 8.4 per cent.
Agriculture accounts for a quarter of the gross domestic product and provides employment to around two-thirds of the country’s billion plus population. It grew only 1.7 per cent in the previous three months, April-June, due to the fallout from a drought in 2002.
“The farm sector growth in the next two quarters would expand faster as the full benefits of good rains in the June-to-September monsoon would be realised,” said P. K. Chowdhury, MD of rating firm Icra.
Besides agriculture, the growth in the economy was bolstered by the manufacturing sector (7.3 per cent), construction (6.4 per cent), trade, hotels, transport and communications (11.9 per cent) and financing, real estate and business services (7.3 per cent).
Expectations of the strong growth have driven foreign investors to pump in a record $6.4 billion into the stock market — driving the benchmark 30-issue Bombay share index, up more than 70 per cent in 2003.
“The manufacturing sector has been leading a strong recovery,” Chowdhury said, adding consumer demand is expected to remain strong in the third quarter although prices are on the rise. Sales of cars, mobile phones and televisions were up as people took advantage of three-decade low interest rates. Tax breaks for housing fuelled demand for steel and cement.
The country’s fiscal deficit in the first eight months (April-November) of the current financial year widened to Rs 93,656 crores or 61 per cent of the official full-year target, which is 5.6 per cent of the GDP.
The country’s external debt mounted to $112.54 billion in the first half of this fiscal, even as debt-GDP ratio fell to 20.3 per cent from as high as nearly 31 per cent in the corresponding previous period.
Balance of payments for the second quarter ended September 30, 2003 saw a surplus on current account of $500 million benefiting from net invisible surpluses of $6.7 billion.