India quarterly growth accelerates to 6.1 pct

India’s economy grew by 6.1 percent in the three months to June, picking up pace from the previous quarter and signalling the country’s emergence from the global downturn.

By (AFP)

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Published: Mon 31 Aug 2009, 4:26 PM

Last updated: Thu 2 Apr 2015, 2:55 AM

The expansion, spurred by government stimulus packages and aggressive monetary easing that has made loans cheaper, was up from 5.8 percent growth in the March quarter, official data showed Monday.

India’s faster growth came as the Asian region as a whole rebounds from the worldwide slump.

Analysts said a robust industrial performance by Asia’s third-largest economy should offset the impact of a widespread drought caused by a bad monsoon.

“I don’t think the drought will mess up growth prospects too much,” Dharmakirti Joshi, economist at credit rating agency Crisil, told AFP.

“While agriculture growth will be hit, other areas will pick up, such as industry,” said Joshi, who forecast growth for the year to March 2010 of “close to six percent.”

Agriculture grew by 2.4 percent in the June quarter, down from 2.7 percent in the previous quarter. But breakdown of gross domestic product by sector showed industrial output grew by five percent, up from 1.4 percent.

Excluding agriculture, overall GDP rose 6.8 percent on the year compared with 6.4 percent in the previous quarter — the first improvement since the January-March quarter of 2008.

The figures were in line with analysts’ forecasts. The economy grew by 7.8 percent in the same quarter last year.

“The worst may be over and we expect to see improved performance in subsequent quarters,” said senior government economic policy advisor Montek Singh Ahluwalia.

Shares ignored the data with the Bombay Stock Exchange’s benchmark Sensex down by 1.69 percent or 268.91 points by mid-afternoon as investors took profits following a seven-day rally.

Finance Minister Pranab Mukherjee has projected growth of “six percent plus” for the year to March 2010, down from the 6.7 percent logged last year and far below the nine percent levels of the previous three years.

India has weathered the global slowdown downturn far better than many of its Asian counterparts that fell into recession, thanks to its domestically focused economy.

The weak monsoon had sparked concern about India’s growth expectations, with rural demand a key consumption driver. The rains are a lifeline for agriculture which supports over half of India’s nearly 1.2 billion population.

Last weekend, Prime Minister Manmohan Singh said India faces a “severe drought” with 44 percent of the nation’s districts afflicted.

But the strong industrial performance and the ongoing effects of interest rate cuts should compensate for the sluggish farm output, analysts said.

Local carmakers, for instance, have reported a surge in sales.

“The full impact of the various fiscal and monetary stimulus packages have still to come through,” said HSBC economist Robert Prior-Wandesforde who stuck by his forecast of 6.2 percent growth or higher for this fiscal year.

“The combination of aggressive fiscal measures and monetary easing will cushion the hit to the economy from the poor rains,” agreed Rajeev Malik, economist at Macquarie Securities.

The poor rains are “a near-term hiccup in the evolving rise of the Indian economy,” he said.

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