The growth in Indian GDP in this quarter and its impact on other sectors
The Indian GDP has recorded a growth of 6.1%, according to the results announced by the government. The Q1 results show that the Indian GDP has managed an increase despite the recession that has hit economies worldwide. At a time when the developed economies are still struggling with high unemployment rates and fall in growth rates, this upturn in the Indian economy is a clear indication that the recession period maybe slowly coming to a close. This steady growth rate also means that India maintains its position as the second fastest-growing economy in the world stands, with the first being China, which has recorded a growth of 8% even in these times of recession.
The GDP growth rate has been steadily increasing. It was 5.8% in the previous quarter and 5.5% in the quarter before that. Talking about individual sectors, electricity generation and mining have recorded the highest growth of 6.2% and 7.9% from 2.7% and 4.6% a year ago, respectively. Also, the sectors of financing, real estate, insurance and business services have recorded a growth of 8.1% from 6.9% from a year ago.
Swine flu played spoilsport as the worst affected sectors this quarter have been hotels, transport, communication and even trade. Other sectors which were hit badly were the construction and community services. The services sector also grew but less in comparison to it’s year-ago results. This sector which accounts for 57% of the economy’s output, grew by 7.8% as compared to the 10.2% growth rate from a year ago. The farming and manufacturing output also grew by 2.4% and 3.4%, respectively.
However, this is not enough cause for celebration, yet. The low monsoon may throw a dampener on this growth rate. There is the speculation whether this growth can be maintained in view of the poor monsoon performance this year. The monsoon this year has been one of the lowest to be recorded in recent times. Already there are talks of importing close to 10 million tonnes of rice this year due to low agricultural production.
Nevertheless, the government is optimistic about this growth. “I am glad that the worst maybe over and we expect to see improved performance in subsequent quarters…We expect the growth rate to be 6.5% or above. Growth in the economy was every encouraging and it is expected to improve further going forward.”, said Mr.Montek Singh Ahluwalia, Planning Commission deputy Chairman to reporters in Delhi.
With a 6.1% growth in the GDP, India certainly seems to have come out of the negative impact of the global meltdown. Although, this is less than the 8-9% growth that we have been trying to maintain. But with a steadily growing GDP rate, even in the recession period, India certainly seems to be on the right path to recovery.