Macroeconomic and Monetary Developments: Third Quarter Review, 2005-06

The robust performance of the Indian economy continued during the second quarter (July-September) of 2005-06. According to the Central Statistical Organisation (CSO), the economy recorded a real GDP growth of 8.0 per cent in the second quarter of 2005-06 maintaining the momentum of growth in the first quarter, and notably higher than that of 6.7 per cent a year ago. Although there was some loss of pace in manufacturing activity during the second quarter from the double-digit growth of the first quarter, it was more or less offset by a stronger growth in the services sector, especially the sub-sector ‘financing, insurance, real estate and business services’. Real GDP originating from the ‘agricultural and allied activities’ benefited from the positive impact of the near normal South-West monsoon. Overall, the economy thus recorded a real GDP growth of 8.1 per cent in the first half of 2005-06, one percentage point higher than a year ago. Against the backdrop of the overall performance of the Indian economy in the first half of 2005-06, presented here are developments in the Indian economy during 2005-06 so far covering the agricultural sector, industrial production, business and investment expectations and the lead indicators of service sector activity. The external sector has also been covered.