Implicitly, economic performance is slated to improve during the final quarter

The overall pace of economic growth decelerated to a lacklustre 5.5% during the fiscal third quarter from 8.9% a year ago and 7.6% the preceding quarter.

The decline follows a sharp plunge in the real gross domestic product (GDP) originating from the secondary sector and an absolute decline in thecontribution from the primary sector, which could not be offset by a robust showing of the tertiary segment.

According to the data released by the Central Statistical Organisation (CSO), in the first nine months of 2008-09, GDP at constant prices rose 6.9% as against a spurt of 9% during the same period the previous fiscal, suggesting that the economy is in the midst of a "slowdown syndrome", with the pace of GDP rise consistently lower in all the three quarters of this fiscal vis-à-vis the same quarters of last year.

Implicitly, the economic performance is slated to improve during the final quarter.

In its advance estimate for 2008-09, CSO had pegged the GDP surge at 7.1%. With this rate estimated at 6.9% during the first three quarters, the momentum is expected to pick up very modestly to 7.3%.

Though the growth rate in the October-December 2008 period and to date is dismal, there is a silver lining to the gloom.

Going by the CSO figures, there is no let-up in the tempo of investment activity.

The rate of gross fixed capital formation was at an impressive 33.4% during the third quarter — up from last year's 33%. Also, in each of the three quarters of this fiscal year, the investment rate has been consistently higher than what it was during the corresponding quarter of 2007-08.

The inference is clear: despite the crisis in the economy, the sums earmarked for creation of productive assets are, in fact, on a rise. This trend should, even in the short-term, help propel the economy to a high growth orbit.

Dissecting the CSO figures, it is evident that, during the third quarter of this year, the primary sector had put up a pathetic show; the real GDP of this sector, comprising agriculture, forestry and fishing, contracted by 2.2% in contrast to a jump of 6.9% a year ago. There is a tacit admission that all has not gone well in the kharif season with the output of food crops expected to be lower by 2.5% and of cash crops such as oilseeds, cotton and cane faring worse.

In the secondary sector, where the GDP growth rate had slackened to a mere 2.4% from as high as 8% in the October-December, 2007 period, the main culprit was the heavyweight manufacturing. Here, the real output fell by 0.2% as against a jump of 8.6%. In electricity, gas and water supply as well as construction, there was a loss of momentum in the latest quarter at 3.3% and 6.7%, respectively.

The tertiary sector seems to be largely immune to the slackness felt in other sectors of the economy. The real GDP from the services sector managed to register a flattering 9.9% in the third quarter — not far behind the surge of 10.2% in the previous fiscal.

Interestingly, the GDP emanating from community, social and personnel services within the services sector has exhibited a hefty growth rate - to 17.3% from 5.5% during the third quarter and to 11.2% from 5.7% during the April-December 2008 period.

For the nine-month period ending December 2008, the broad pattern of growth parallels that of the third quarter — real output down to 5.1% from 8.7% in secondary sector and to 9.8% from 10.5%. In the case of primary segment, the rise was a niggardly 0.6% as against 5.5%.

The structural retrogression, implicit in our growth process, is also brought to the fore by the CSO data. The share of the commodity-producing sectors in the economy - primary and secondary in GDP - has dropped to 43.3% during the first nine months of 2008-09 from 45.5% during the same period of the preceding year

S Gangadharan/ DNA-Daily News & Analysis Source: 3D Syndication