Riding on this growth performance, the finance minister P Chidambaram today called for more “political space” to further the reform process in order to improve India’s growth story.”Given the performance of the last two and half years of the economy, I wish everyone will cooperate in giving the government political space to implement further economic reforms that are contemplated in NCMP, budget speeches and various pronouncements,” he said.

Speaking to reporters on the GDP numbers released today and the reforms needed, Chidambaram said that in a coalition it was very important that “political space is given to the government to undertake further economic reforms” and added that there were many such matters which were pending or were in the pipeline.

While this year there was a drop in the growth of electricity, gas and water supply sector, where this year’s first quarter dipped by 2 percentage points from 7.4 per cent in the first quarter of 2005-06, there was a noted improvement in the manufacturing as well as trading sectors during the first quarter of this year.

According to the quarterly growth figures, even the traditionally laggard mining and quarrying sectors improved marginally during the first quarter of this fiscal as compared to the previous year. This sector grew at 3.4 per cent as compared to a growth of 3.1 per cent during the first quarter of 2005-06.

The manufacturing sector grew at 11.3 per cent during the first quarter of this year as against 10.7 per cent of the previous year while the trade sector grew at 13.2 per cent as compared to 11.7 per cent during the first quarter of 2005-06.

However, this year’s growth remained above the 8.5-per cent mark largely on account of growth in the agriculture sector, which has a higher weight in the GDP basket, remaining at 3.4 per cent, while growth in the financing, insurance and real estate marginally improved from 8.8 per cent during the first quarter of 2005-06 to 8.9 per cent during the first quarter of this year.

Chidambaram said that financial sector was “the heart of the economy” and unless reforms in this sector were “completed” it would “be difficult to sustain high growth.” Referring to pending reforms in areas such as the banking and pension sectors, he said: “I wish and hope that we are given the political space to push through reforms.”

While growth in the construction sector dipped from 12.4 per cent to 9.5 per cent during the first quarter of 2006-07, the Finance

Minister expressed confidence that the economy would “at least” grow by 7.5 per cent every quarter and said that the economy could “even do 8 per cent if we followed prudent policies and fiscal discipline.”