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The Indian economy is estimated to have grown at close to five per cent in the April-June quarter of 2013-14, around the same rate as in the previous quarter, dashing hopes of a continued recovery and raising the prospect of more problems for the government which is already stressed by the widening current account deficit and the volatile rupee.
The final calculations are still being done but it is unlikely that growth would see a significant pick up. The economy is estimated to have grown at about 4.8 per cent to 5 per cent, said a source.
The Central Statistics Office is due to publish the official GDP data for the first quarter on August 30.
The economy grew at 4.8 per cent in the last quarter of 2012-13, marginally lower than the 5 per cent clocked in the first quarter of that year.
While higher government spending and improved performance of the farm sector due to a good monsoon gave some boost to the economy, manufacturing and mining activities registered little or no growth during the period. Other important contributors to the GDP, including banking, financial services, transport and tourism, also did not see much growth in the first quarter of this year.
Growth in bank deposits and credit was marginal while that in air cargo and passenger services has been disappointing, the source said.
The government is keen to return to a higher growth trajectory, which in turn could help revive capital flows, stabilise the currency and finance the current account deficit. A revival in growth would also help keep the fiscal deficit in check through improved tax receipts.
However, Finance Minister P Chidambaram seems to have factored in weak first quarter growth but has expressed confidence that it would revive later in the fiscal. We expect that the growth trend will remain flattish in the first quarter, but even so we are in better health than many other countries of the world, he had told reporters on Thursday.