The Indian economy grew at 5.5% in the Q1FY13, marginally better than the 5.3 per cent in Q4FY12.
If not for the double-digit growth of the construction sector in Q1FY13; overall GDP growth would have been closer to 5 per cent in Q1FY13.
The industrial sector excluding construction grew at mere 0.8 per cent – an expected outcome of near stagnant mining and manufacturing output.
In recent months, the manufacturing sector has been hit by slowing investment demand and contraction in merchandise exports.
The growth of services sector at 6.9 per cent in Q1FY13 fell below the 7% mark for the first time since Q4FY09. Services growth in Q1FY13 slowed due to a sharp decline in private consumption growth as well as slowing exports of IT services.
Given weak global economic environment and deficient monsoons, GDP growth is expected to remain subdued over the remaining quarters of this fiscal as well. We, therefore, expect GDP to grow at 5.5 per cent during FY13. Swift policy action to solve issues related to mining, land acquisition and speedy clearance of projects can create upside to the growth projection.