India's economy expanded by 8.6% in the third quarter to December, hit by weak farm growth on the back of poor monsoon rains, data on Feb. 28 showed. The figure, released on the same day as India's budget which made boosting farm output a key goal in the next fiscal year, was below a consensus forecast of 9.3% and compared with 9.3% in the same period a year earlier.
Quarterly growth was powered by strong performances by the industry and service sectors, though the pace of increase in manufacturing output decelerated further in the final quarter of 2006. The manufacturing sector gained 10.7%.
Growth in the mining sector stood at 5.7% against 2.7%, while electricity, gas and water supply sectors grew by 9.3% compared to 5% in the same quarter last year.
The Indian economy has expanded by an average of over eight percent annually in the past three years, making it the second fastest growing among the world's top economies.
The central Reserve Bank of India has been raising interest rates since late 2004 in a bid to curb inflation which hit a more than two year high of 6.73% earlier in February. The rate is well above the central bank's tolerance level of 5% to 5.5% and the Reserve Bank has said it will not hesitate to tighten further.
Inflation has been fuelled by crop shortfalls that have driven up basic food prices as well as strong demand among an increasingly affluent middle class for homes, cars and consumer goods in this nation of 1.1 billion. The government, in the budget, halted futures trading in wheat and rice to contain price rises in the two foods which are Indian dietary staples.
Copyright Agence France-Presse, 2007
