“The real GDP growth firmed up to 9.1% in the first half of 2006-07 from 8.5% in the first half of 2005-06 due to the increase in real GDP to 9.2% in the second quarter and 8.9% in the first quarter, YV Reddy said in the review statement. The real GDP originating in agriculture, industry and services sectors rose by 2.6%, 10.1% and 10.6%, respectively, during the first half of 2006-07 as against 3.7%, 7.9% and 10.2% a year ago.

Going by the available information for the third quarter of current fiscal, he said that the momentum of economic activity has been sustained, but with some setbacks in the agricultural sector. The initial estimates of the ministry of Agriculture place kharif foodgrains production at 105.2 million tonne for the current financial year – lower than 109.7 million tonne in 2005-06 and also well below the target of 115.3 million tonne.

The index of industrial production (IIP), an index of industrial activity, rose by 10.6% during April-November 2006 as against 8.3% a year ago. Manufacturing industry contributed nearly 91.2% of this growth, expanding by 11.5% (9.4% a year ago) led by basic metals and alloys, non-metallic mineral products, machinery and transport equipment, basic chemicals and products and cotton textiles. The RBI’s industrial outlook survey points to optimism on the growth outlook.

“The buoyant domestic and export demand conditions continued to support private corporate sector performance. Sales of a sampled non-financial private companies grew by 27.4% in the first half of 2006-07, up from 17.2% a year ago while their net profits increased by 41.6% against 41.3% in the first half of 2005-06”, the policy statement highlighted.

The leading indicators of the services sector also suggest that the robust growth recorded in 2005-06 was sustained in 2006-07 so far, it said.