| Durga Puja at Maddox Square in Calcutta. Picture by Pabitra Das
New Delhi, Sept. 29: India’s economy today tooted its horn as the country swung into a celebratory mood with the festive season getting under way.
The economy grew 8.9 per cent in the first quarter (April-June), topping the most optimistic forecast of 8.7 per cent by the number crunchers in research outfits and fund houses.
Second, inflation — flagged as the biggest worry by the Reserve Bank of India in its annual report last month —dipped to 4.56 per cent, well shy of the central bank’s forecast of 5 to 5.5 per cent by the end of the financial year next March.
The surge in GDP growth and the dip in inflation saw the Bombay Stock Exchange barometer, the sensex, sizzle, clambering to its fourth highest level at 12,454.42 points, up 73.68 points from the overnight level. The sensex hit its highest level in mid-May.
“I am confident that the GDP growth rate will be at least 7.5 per cent every quarter now and even go up to 8 per cent if we followed prudent policies and fiscal discipline,” finance minister P. Chidambaram said.
He said ever since the UPA government had taken over, the quarterly economic growth had been over 7 per cent, except in the second quarter of 2004-05.
The government is aiming for 8 per cent growth in 2006-07 and the central bank has forecast 7.5-8 per cent.
GDP growth in the first quarter slacked off after a pacy 9.3 per cent in the previous quarter (January-March) but this is typical in an economy where the fourth quarter of a fiscal year generates the highest growth because of seasonal factors.
GDP growth in the first quarter of 2005-06 was 8.5 per cent and the year closed with a growth rate of 8.4 per cent.
Chidambaram admitted that there were some concerns about price rise, particularly of wheat and pulses, because of supply constraints. But the government will strive to peg inflation at 4 per cent, he added.
Official figures released today show that agriculture remained stagnant at 3.4 per cent during the April-June quarter. Manufacturing was the bright spot, shooting up by 11.3 per cent in the first three months compared with 10.7 per cent in the same period of 2005-06.
Chidambaram said: “I am particularly happy with the growth of the manufacturing sector and the government will ensure that its credit requirements are not denied or delayed and given at reasonable interest rates.”
But there was one sobering fact that took some of the shine off the three feel- good factors. Figures released today by the National Sample Survey Organisation showed that joblessness was on the rise.
More than half of the country’s employable population was without jobs during 2004-05, with urban India accounting for most number of people out of work. The unemployment rate among the educated was higher.