Former UN official Shashi Tharoor was back in more familiar attire on Friday when he took over as the junior foreign minister (left). Tharoor had overnight slipped into the Kerala mundu (dhoti) and public life with ease and waged the election battle wrapped in the favourite Malayali dress. Picture on right shows Tharoor on his way to the Congress parliamentary party meeting in New Delhi on May 19. Pictures by Prem Singh and PTI

New Delhi, May 29: The new government’s first full day in office was greeted with official figures that suggested India’s faltering economy is at best recovering quickly and at worst weathering the storm better than expected.

The economy notched up a 5.8 per cent growth in the quarter ended March 31 and clocked 6.7 per cent for the full 2008-09 financial year, according to estimates released by the Central Statistical Organisation today.

The whole-year figure, although lower than the 9-per-cent-plus growth in the preceding three years, is far ahead of the worst-case scenarios projected by international agencies and more or less in line with what the Prime Minister had forecast in the last leg of the first UPA government.

“The economy seems to have crossed the hump... but real growth will happen once the new government’s policies start taking effect,” said S.P. Gupta, a former Planning Commission member.

Areas of concern still remain, especially manufacturing. The services and the agriculture sectors rekindled growth in the economy but the manufacturing sector contracted by 1.4 per cent.

The services sector comprising hotels, financial services and insurance surged 9.5 per cent while the farm sector grew 2.7 per cent to provide the ballast for the economy.

“Growth is dependent on services and agriculture, and manufacturing still has to improve,” Gupta pointed out.

The government also came out with national income data that suggest each Indian is now figuratively earning more than Rs 3,000 a month for the first time.

Per capita income — national income divided by number of people — rose over 12 per cent to Rs 37,490 a year in 2008-09. This means that each Indian’s monthly earning can be Rs 3,124 if the national income is equitably shared among all the people — a statistical egalitarianism that is not reflected on the ground. Per capita income in 2007-08 was Rs 33,283, or just over Rs 2,773 a month.

The data showed that national income had swelled to Rs 43.26 lakh crore in 2008-09, rising 14.2 per cent, while the population of the country had increased by 1.6 crore to 115.4 crore.

The mood spilled over to seats of power, too. On Friday, several ministers came out with upbeat statements and promises of robust reforms which sent the sensex surging by over 2.3 per cent to 14625.25 points — the highest close since September 10 last year. The index has leapt 28 per cent in May, the sharpest rise in any single month since 1992.

Investor sentiment was buoyed by petroleum minister Murli Deora’s promise to free petroleum prices and commerce minister Anand Sharma’s indication of incentives in the budget. “There are already some signs of industrial revival,” Sharma said.

Unlike China and the Asean nations, India relies far less on exports, which economists reckon is one of the main reasons it is recovering faster than other economies.

The export sector was hit but the government slashed service tax and excise duties and increased spending to lift demand. “Government consumption spending grew by some 20 per cent instead of the usual 10 per cent. This helped put the economy back on the rails,” said D. Joshi, chief economist with Crisil.

However, Joshi said it would take another six months before the economy started firing on all cylinders.