State of the Economy
1.9The higher growth in community, social andpersonal services during 2008-09 was mainly due toan expansionary fiscal policy that was reflected inthe demand side of GDP as higher growth ofGovernment consumption expenditure.
1.10The slowdown in growth of GDP is moreclearly visible from the growth rates over successivequarters of 2008-09. In the first two quarters of 2008-09, the growth in GDP was 7.8 and 7.7 per centrespectively. The growth fell to 5.8 per cent in thethird and in the fourth quarters of 2008-09 (comparedto 9.3 and 8.6 per cent in Q3 and Q4 of 2007-08).The third quarter witnessed a sharp fall in the growthof manufacturing, construction, trade, hotels andrestaurants. Agriculture growth also turned negativeadding a further dampener. On the other hand,community, social and personal services showed alarge increase from the second quarter, mainly dueto a step up in government expenditure. The lastquarter saw an added deterioration in manufacturingdue to the deepening impact of the global crisis anda slowdown in domestic demand (Table 1.2).
Industry and infrastructure
1.11Though growth of the industrial sector startedto slow down in the first half of 2007-08, the overallgrowth during that year remained as high as 8.5 percent. The index of industrial production for the year2008-09 points towards a sharp slowdown withgrowth being placed at 2.4 per cent. Manufacturinggrowth was placed at 2.3 per cent in 2008-09 ascompared to 9.0 per cent in 2007-08. Mining grew at2.3 per cent in 2008-09 as against 5.1 per cent in2007-08 while electricity showed a deceleration ingrowth from 6.4 per cent in 2007-08 to 2.8 per centduring 2008-09. Slower growth in all use-basedcategories, except consumer durables, contributedto the deceleration in the industrial sector.1.12The performance of six core industriescomprising crude oil, petroleum refinery products,coal, electricity, cement and finished steel (carbon)grew at 2.7 per cent as compared to 5.9 per cent in2007-08. The growth in index for crude oil turnednegative 1.8 per cent as compared to positive 0.4per cent in 2007-08. There was a deceleration in thegrowth of cement and finished steel reflecting thenegative sentiments in the construction andmanufacturing sectors.
1.13For three consecutive years (2005-06 to 2007-08), foodgrain production recorded an average annualincrease of over 10 million tonnes. The total foodgrainproduction in 2007-08 was estimated at 230.78 milliontonnes as against 217.3 million tonnes in 2006-07.1.14As per the third advance estimates, theproduction of foodgrains in 2008-09 is estimated tobe 229.85 million tonnes. In the third advanceestimates, there is an improvement of 1.97 milliontonnes over the second advance estimates for 2008-
Table 1.2 : Quarterly estimates of GDP 2007-08 and 2008-09(percentage change – y-o-y)
Agriculture, forestry & fishing184.108.40.206.23.02.7-0.82.7Mining & quarrying0.13.84.24.220.127.116.11.6Manufacturing10.08.28.66.18.104.22.168-1.4Electricity, gas & water supply22.214.171.124.126.96.36.199.6Construction11.013.49.76.188.8.131.52.8Trade, hotels, transport &communication13.110.911.713.813.012.15.96.3Financing, insurance, real estate &bus. services12.612.411.910.36.96.48.39.5Community, social & personalservices184.108.40.206.58.29.022.512.5GDP at factor cost (total 1 to 8)9.29.09.38.220.127.116.11.8
Source : Central Statistical Organisation.