Q1: The Answer Is 8.1%

Q1’s eight per cent came from a record manufacturing industry growth of 11.3 per cent, with services and farms contributing 12.4 and 2 per cent respectively. WithIMD declaring the monsoons at 99 per cent of the long period average, kharif output is expected to rise by at least 2 per cent. In fact, the trend growth rate in agriculture has almost halved over the past 15 years to less than two per cent, in itself a matter of great concern. Even agricultureGDP is stagnant. Worse, in Q1 estimates, the share of agriculture in GDP has fallen to a mere 20 per cent!

Analysts agree that the unexpectedly strong showing was mainly on account of services, especially financial services, trade and transportation, and retail, and some moderation might set in in future both in services and manufacturing. PC himself expects the rising oil price scenario to moderate growth outlook.

Higher oil imports as well as the 37 per cent growth in total imports this year so far have helped push the trade deficit to over $17 billion in Q1. The current account deficit is at $6.2 billion, a 300 per cent decline from the corresponding quarter last fiscal. However, PC feels that the country has shown remarkable resilience in the face of several natural calamities, beginning with the tsunami, the Mumbai floods, and now the quake, and would be able to take in its stride even a trade deficit of $50-55 billion by the year-end.

But, as the IMF’s World Economic Outlook says, the days of easy money are definitely over. With inflation hardening, industrial growth tempering (theIIP slowed to 7.2) and borrowings on the rise, growth in the remaining fiscal may not match PC’s expectations. The way to go then would be to raise the bar for India at global levels.

Says Arvind Panagariya, professor, Columbia University: "We can push harder on liberalisation in industrial goods with the possibility of complete free trade in them by 2016 in developed and 2021 in developing countries. Even in agriculture, our bound tariffs are much higher than the high applied ones. We should not forget the benefits from specialisation we reaped in industrial goods in the past 15 years and try to replicate it in agriculture as well." For now, India has a six per cent share in globalGDP and much less in its trade. Only words will not make us one among, as PC hoped in his lecture at Yale, the three major global players.