The GDP spurt was on the back of a very strong 11.3% growth in manufacturing. Services continued to do well with a 10.6% growth in output, against 9.8% a year ago.
But agriculture stayed sluggish with 3.4% growth, the same rate at which it grew in the corresponding period last year. The GDP growth reported in the corresponding period last fiscal was 8.5%.
Commenting on the high GDP growth in Q1, finance minister P Chidambaram said, Since 2004-05, GDP has grown at 7% plus every quarter except Q2 of 2004-05. In the last five quarters, growth has moved up a notch.
With sound economic policies and fiscal prudence, the GDP growth could be maintained at 8% or above every quarter, he said, adding pushing financial sector reforms was vital for sustaining the momentum. The finance minister said maintaining GDP growth at current level was contingent on adequate credit flow to productive sectors at reasonable rates.
Bank credit has grown 31% so far this fiscal, prompting the RBI to hike the benchmark rate three times.
With sound economic policies and fiscal prudence, the GDP growth could be maintained at 8% or above every quarter
Construction growth, however, slowed to 9.5% from 12.5% a year ago. Growth in electricity, gas and water supply slipped to 5.4% from 7.4% in April-June 2005-06.
Mining registered a growth of 3.4% compared with 3.1%. Financing, insurance, real estate and business services grew marginally faster at 8.9% against 8.8% . Community, social and personal services rose by 7.4% from 7.3% in the corresponding period of last year.
In rupee terms, GDP at factor cost stood at Rs 6,56,064 crore in the first quarter this fiscal, against Rs 6,02,476 crore in April-June 05-06.