29 Aug 2008 11:52 AM

Real GDP grows by 7.7 per cent in June 2008 quarter

Poor performance of manufacturing sector; services, construction continue to drive growth

As per the estimates released by the Central Statistical Organisation, real GDP at factor cost grew by 7.7 per cent in the quarter ended June 2008. This was the lowest growth in the real GDP in any of the last 14 quarters.

The prime reason behind the slow growth in the GDP in the June 2008 quarter the poor growth clocked by the manufacturing sector. It grew by 5.6 per cent as compared to the 10.9 per cent growth clocked in the same quarter a year ago. Growth in electricity, gas & water also remained subdued at 2.6 per cent. The mining & quarrying sector grew by 4.8 per cent, while GDP from the agricultural sector rose by three per cent.

It was the construction sector and the services, which pulled up the GDP growth during the June 2008 quarter. The construction sector grew by 11.4 per cent. The GDP generated by the service sector grew by 10 per cent. The main driver of this growth was the trade, hotels, transport & communication segment, which grew by 11.2 per cent. The growth in finance,insurance & real estate was 9.3 per cent, while that in commercial, social & personal services was 8.4 per cent.

The expenditure or demand side data of real GDP indicates that the private final consumption expenditure continued to grow at a brisk pace, registering an eight per cent growth. The government final consumption expenditure grew by 7.7 per cent. The CSO placed the growth in gross capital formation at nine per cent, the lowest in at least the last nine quarters.

Manasi Swamy
smanasi@cmie.com