The Indian economy grew 7.9 per cent during the July-September period — its strongest in six quarters — on the back of higher consumer spending and private investment, according to government data released on Monday.
The growth achieved beat most forecasts and prompted experts to revise their full-year growth projections.
“I do hope it will be possible for us to achieve 7 per cent plus (growth rate), but still it is too early to predict,” Finance Minister Pranab Mukherjee told reporters in New Delhi.
Growth of the Indian econo-my slowed to 6.7 per cent in 2008-09 after remaining at close to 9 per cent for four years before a financial crisis in the US roiled the global economy.
The latest data cheered the stock markets with a 294-point — or 1.8 per cent — gain for the Sensex.
The acceleration in the growth of the broader economy through the July-September quarter was led by manufacturing, which grew 9.2 per cent from a year ago, helped by stimulus measures unveiled since last October. Services also registered robust growth, rising 9.3 per cent in the same period.
“The latest quarterly GDP figures are a further confirmation of the Indian economy recovering,” said Harshpati Singhania, president of the Federation of Indian Chambers of Commerce and Industry.
However, there are concerns, over rising inflation and a widening deficit in the government’s budget. Also, the impact of the drought on farm output will show up in the next quarter.
“The immediate challenge is lower agriculture output, which is likely to be a drag on GDP in the October-November quarter when the summer crop is harvested,” said Sonal Varma, economist at Nomura Financial Advisory and Securities Ltd., a leading brokerage firm.
A 23 per cent deficiency in the rains this year is expected to keep this season’s rice production 18 per cent lower than last year. While lower farm output directly affects GDP growth, about a fifth of which comes from agriculture, there could be indirect impact as poor harvest dents rural consumption.