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Economy Update - June 2009

Economy Update: India's GDP grew 5.8% during Q4FY09.

The GDP growth estimated by the CSO at 5.8% during Q4FY09 as against 8.6% in Q4FY08 and 5.8% in Q3FY09 came above street expectations.
The 'agriculture, forestry & fishing' segment picked up to 2.7% in Q4FY09 from 0.8% decline in Q3FY09 on back of good winter crops. However, manufacturing sector declined 1.4% in Q4FY09 on expected line as reflected by the falling IIP numbers in recent times.

The GDP growth was 6.7% for FY09 despite the world economy facing one of deepest economic crisis on back of 13.1% expansion in community services, 9.0% in transport and communications sectors and 7.8% in financial and other services sector.

Our savings as well as Investments as a percentage of GDP are one of the highest in the world, which is likely to insulate us (albeit partly) from deteriorating world economic environment. We expect economic activities to pick up in the H2FY10. The recent indicators like PMI data, cement dispatches, auto sales numbers etc are also showing improvements. Apart from this Q3FY09 number which has been revised upward from 5.3% earlier to 5.8%, is also heartening.