New Delhi: Showing signs of recovery, the Indian economy grew by 6.1 per cent in the June quarter up from 5.8 per cent in the previous quarter. In contrast, the economic expansion was much higher at 7.8 per cent in the first quarter of last fiscal.
The GDP growth recorded in the first quarter of the financial year is the fastest since the beginning of the global financial crisis. The accelerated growth could be attributed to government's increased spending and lower interest rates, even though it comes at the expense of a sharply wider deficit.
"I think the worst is over and we should have more recovery in the days ahead," said Montek Singh Ahluwalia, Deputy Chairman, Planning Commission.
However, economists do not share the government's optimism because the real impact of the drought on its growth forecast hasn't been assessed till now.
Experts are concerned that a hit to consumer sentiment could slow the recovery and even prevent consumers from spending too much.
The data released on Monday showed the mining and electricity in industrial sector posted higher growth in the first quarter of this fiscal. However, agriculture and manufacturing industry grew at a slower pace from the year-earlier period. The services sector also recorded a weak growth of 7.8 per cent versus as against 10.2 per cent recorded a year-earlier.
So, just like the global recession, the worst for India may be over, but what will be closely watched ahead is the impact of the drought. And if draught plays into inflation and high interest rates, then it can hinder recovery.