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India experienced surprisingly strong economic growth, when it recorded an increase in GDP by 7.6 percent in the second quarter, which lasted from July to September. As per the official data, despite the global meltdown, Indian economy surpassed the expected growth, pegged at around 7.3 percent. Still, the GDP growth was less than the 7.9 percent that was recorded in the previous quarter. It was also much lower than the 9.3 percent growth attained in the same period, previous year.
The reason for lower economic growth, as compared to previous quarters and last year, are the higher borrowing costs and financial turmoil, which have resulted in a fall in demand. As per Crisil analyst D.K. Joshi, the best part of this economic year is already over. Breaking down the 7.6 percent growth, we find that manufacturing industry expanded by 5 percent and agricultural output by 2.7 percent. While the latter has come down from 9.2 percent in the year-ago period and 5.6 percent in the first quarter, the latter was 4.7 percent a year earlier.
Electricity and related sectors grew by 3.6 percent in this fiscal, much less than the 6.9 percent that was recorded in the same quarter of the previous financial year. As per Rajeev Malik, of Macquarie Securities, though the GDP rate is better than expected, it is indication of the coming deceleration in growth. Government policymakers expect the economy to grow around 7 percent in the rest of this year. On the other hand, Private economists project growth to be as low as 6.7 percent and 5.5 percent in the coming quarters.
