The real GDP grew at 7.7% during Q1FY12 (versus 7.8% last quarter and 8.8% Q1FY11). This growth is substantial considering the high base from last year. Agriculture, Industry and Services grew at 3.9%, 5.1% and 10%, respectively as compared to 2.4%, 10.5% and 9.6%. The headline number was supported by robust growth in ‘Electricity, gas and water supply’ at 7.9%, ‘trade, hotels, transport and communication’ at 12.8%, ‘financing, insurance, real estate and business services’ at 9.1%.
According to the Department of Agriculture and Cooperation (DAC), the production of crops - rice, wheat, coarse cereals and pulses during the Rabi season have recorded growth rates of 11.3%, 6.3%, 0.7% and 4.9%, respectively. ‘Agriculture’ sector grew by 3.9% in Q1FY12 v/s 2.4% last year and 7.5% in Q4FY11.
Industry sector grew by 5.1% during Q1FY12 as compared 10.5% last year and 6.1% in Q4FY11. The Manufacturing and Electricity, gas, water supply showed robust growth of 7.2% and 7.9% respectively in Q1FY12 (10.6% and 5.5% in Q1FY11 and 5.5% and 7.8% in Q4FY11). Mining registered sluggish Q1FY12 growth at 1.8% (as reflected in IIP numbers). Industry sector growth for FY12 will likely settle at 7.5-7.75% levels.
Service sector continued its strong growth of 10% v/s 9.6% in Q1FY11 and 8.7% in Q4FY11. The sub-segment – Trade, Hotels, Transport and Communication grew robust by 12.8% v/s 12.1% last year and 9.3% in Q4FY11. Financing, Insurance, Real estate and Business services – continues its strong pace of growth with 9.1% growth during the quarter as compared 9.8% last year and 9% last quarter. The sub-segment – Community, Social & Personal Services slowed down significantly sequentially to 5.6% v/s 8.2% last year and 7% in Q4FY11.
For Q1FY12 Private Final Consumption Expenditure (PFCE) grew at 6.3% v/s 8% in Q4FY11 and 8.8% in Q1FY11. We believe increase in core inflation to have impacted PFCE spend in Q1. In our view, PFCE spend remained inconsistent in FY11 and this parameter will be a key monitorable in FY12 to assess the demand in the economy. Government Final Consumption Expenditure (GFCE) continues to slide, coming in at 2.1% v/s 4.8% growth for Q4FY11. In Q1FY12 Gross Fixed Capital Formation (GFCF) registered strong 7.9% growth v/s 0.4% last quarter.
Going ahead in FY12 we expect manufacturing sector to register sluggish growth in H1FY12 on account of high base effect. With inflation expected to remain elevated in the coming fiscal and the impact of tight monetary policy, we believe growth in the manufacturing sector will be impacted. With growth expected to bounce back in H2FY12 we estimate manufacturing to post growth of ~7.5-7.75% for the fiscal. Services sector will continue to perform strong in FY12 and is expected to grow at ~9%. We expect agriculture to revert to trend / mean growth and post a 3.5% growth. Overall, we expect FY12 GDP growth to be around 7.9%.
| Table 1: Annual GDP data |
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| Amounts in Rs. crore |
Source- Quarterly Report-Business news.
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