The bad news is that both manufacturing and agriculture, that together provide the bulk of the jobs, showed poor growth, pulling down GDP growth.
Only a brave show by services ensured GDP growth touched 5.3%, a tad lower than the 5.5% recorded in the first quarter and well below the 6.7% achieved in the comparable period last year.
But unlike last year, when GDP growth dropped sharply in the second quarter, from 8.0% to 6.7%, the decline is more modest this fiscal, suggesting growth is bottoming out.
Add to that the fact major festivals like Diwali and Eid were celebrated much later this year and there is reason to hope the apparent weakness in manufacturing growth (0.8% as against 2.9% in the same period of 2011-12) might be somewhat exaggerated.
Agriculture, however, poses a deeper problem. Farm sector output grew just 1.2 % in the second quarter as against 3.1% in the same period last year. With inflation, especially food inflation, still dangerously close to 10%, poor farm growth has implications beyond GDP growth. But not everything is bleak.
Gross fixed capital formation (GFCF), a measure of how much the country is investing, has increased, both sequentially and over the same quarter last year.
At 33.8%, capital formation may still be below what it was in the pre-crisis days but if we are able to keep up the momentum and ensure the trend reversal seen in the second quarter continues, we should be able to inch closer to the 6% growth mark. With GDP growth in the first six months clocking just 5.4 %, we will have to grow 6.3% in the second half to realise the RBI's projected growth of 5.8% for the year. That is not impossible.
If the government continues with the new-found reformist fervour and does not succumb to pressure tactics from allies and opposition alike, there is no reason why we should not be able to do it.
http://economictimes.indiatimes.com/opinion/editorial/india-economy-still-has-a-chance-of-growing-by-close-to-6-this-fiscal/articleshow/17436574.cms
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