The country’s gross domestic product (GDP) growth figures are out - 8.9 per cent for the quarter ending September 2007. As per the data released on Friday, hit by the sluggish growth in manufacturing the GDP growth rate has come down to the potential output estimates (the sustainable growth rate for the economy). For the same quarter last year, the GDP growth stood at 10.2 per cent.

The numbers are as per the expectations and are in line with the policies adopted by the Government. Says, Rajiv Kumar, director and chief executive, ICRIER, “This is an expected outcome of the design to cool down the economy a little and the Government policy has achieved the result it wanted.”

So where are we heading? Will we be able to sustain the momentum gained four years back?

With a growth rate of 8.6 per cent, the manufacturing segment has suffered a major setback. The sector has fallen 4.1 percentage points as it stood at 12.7 per cent for the same quarter the previous year. By comparison, the year-on-year fall for the first quarter estimates for manufacturing segment was only 0.4 percentage points.

While in 2006-07 Q2 growth figures (12.7) witnessed an increase of 0.4 percentage points over Q1 (12.3) of the same year, this year the segment showed a dismal performance. The growth figures in Q2 (8.6) dipped 3.3 percentage points as against 11.9 achieved in Q1. This implies that something has impacted this segment. According to Suman K Bery, director general, National Council of Applied Economic Research (NCAER), “Other than the monetary policy that has impacted the manufacturing sector, there has been a softening of demand in the consumer durable segment that has impacted it.”

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