Indian Economy Surged 8.9% During April-June Quarter

Strong showing in services and manufacturing saw the Indian economy surge 8.9% during the April-June quarter, its highest fiscal first-quarter growth rate since 2000-01. The rate of inflation fell to 4.56% for the week ended September 16 from 4.61% in the previous week.

The Finance Minister attributed the robust first quarter GDP growth to:

  • 31% rise in bank credit,  
  • 36.2% growth in commercial vehicle production,  
  • 32.2% increase in civil aviation passenger traffic and a 
  • 48.9% increase in telephone connections. 
The services sector grew by 10.6 per cent, while agriculture grew by a flat 3.4 per cent. Except for electricity and construction, which slowed down to 5.4 per cent and 9.5 per cent from 7.4 per cent and 12.4 per cent, respectively, every sector recorded an acceleration in growth.

For 2005-06, the country’s GDP grew by 8.4 per cent. The RBI has forecast a growth of 7.5-8 per cent for the current financial year. The prime minister’s Economic Advisory Council has projected a 7.9 per cent growth rate, while the Asian Development Bank has estimated growth at 7.8 per cent for the year.

Foreign Institutional Investors' (FIIs) investments in India  has crossed $5 billion in the current calendar year. While it just took seven months to surpass this figure in calendar 2005, it took nine months in the current year. FIIs' net investments touched $5.02 billion during the first nine months of 2006 compared with $8.60 billion during the period last year. FIIs pumped in a record $10.7 billion in 2005, making it their highest-ever investment in Indian equities since the markets opened up in December 1993. According to data released by the Securities and Exchange Board of India, FIIs invested $8.5 billion in 2004. They had invested $6.59 billion in 2003 and $740 million in 2002 (via Business Standard)

India’s foreign exchange reserves increased by $940 million to $166.482 billion during the week ended September 22, according to data released by the Reserve Bank of India (RBI).

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