India's Economy Grows by 7.6%

Manufacturing expanded 5%

India's economy expanded by an unexpectedly strong 7.6% in the three months to September despite the global slowdown, official data showed on Nov. 28.

But second-quarter growth was below the 7.9% logged in the previous quarter and down from 9.3% in the same period a year earlier as demand was hit by higher borrowing costs and the financial turmoil.

"I think the best part of the year is already over," Crisil analyst D.K. Joshi said. The slowdown was apparent across the board with manufacturing expanding by 5%, down from a blistering 9.2% in the year-ago period. It had grown by 5.6% in the first quarter of the current fiscal year to March.

Electricity and related sectors expanded by 3.6%, down from 6.9% in the previous financial year.

Although the data is stronger than expected, "it does not capture the slowdown which has kicked into the second half of the year," said Goldman Sachs analyst Tushar Poddar.

Government policymakers said the economy will grow by around 7% this year.

The data came a day after India's inflation fell to a six-month low of 8.84%, providing more room to the central bank to cut interest rates to spur flagging economic growth, analysts said. Inflation, which was nudging 13% in August, has been falling as global commodity prices collapse and consumer demand drops amid a reduction in lending caused by the global financial crisis.

Copyright Agence France-Presse, 2008

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