10 Aug 2009 4:54 PM

Real GDP growth estimated at 4.7 per cent in June 2009 quarter

We estimate real GDP to have grown by a slower 4.7 per cent in the June 2009 quarter, compared to 5.8 per cent in the preceding quarter and 7.8 per cent a year ago.

All the three major sectors - industry, agriculture and services - are estimated to have slowed down during the June 2009 quarter.

Poor and delayed rainfall in the current monsoon season has adversely impacted agricultural activities. As a result, growth in the agricultural and allied sector is estimated to have contracted by 2.8 per cent during April-June 2009.

While growth in the manufacturing segment is estimated to be a muted 0.9 per cent, higher growth in the mining & quarrying and construction segments would have pushed up the growth in industrial production to 2.6 per cent.

Weak growth in trade, hotel and transportation activities is likely to have restricted the growth in the services segment to eight per cent in April-June 2009 compared to 10.2 per cent in the year-ago quarter.

The fall in commodity prices, poor export demand and holding back of purchases by potential buyers dented sales performance of Corporate India in the June 2009 quarter. Aggregate sales of 3,126 companies fell by 5.8 per cent. This is mainly on account of a 28.7 per cent decline in the sales of the petroleum products industry.

Aggregate net profits of Corporate India, however, grew by a healthy 19.9 per cent, aided primarily by lower costs. A fall in raw material, selling & marketing and other expenses contributed to the growth in profits and the improvement in profitability.

Economic activity is expected to pick up from the September 2009 quarter. As a result, we expect GDP growth to improve to 7.1 per cent in the March 2010 quarter. Correspondingly, we expect sales growth of Corporate India to improve in the December 2009 and March 2010 quarters.

Sonal Bhatia
bsonal@cmie.com