India's Economy Grew 7.4%, Higher than Expected

June 1, 2010
Manufacturing increased 10.8%

In the year ended March India's economy grew 7.4%, official data showed on June. 1. The strong data -- also showing 8.6% year-on-year growth in the fourth quarter -- was boosted by stellar performances in the industrial and service sectors and comes as inflation is running at almost 10%.

Monday's data from the Central Statistical Organization (CSO) showed the manufacturing sector grew 10.8% in the year and the construction and utilities sectors by 6.5% each. The transport and communications sector saw 9.3% growth.

The country has recorded seven straight months of double-digit expansion in industrial output.

The data showed agricultural growth at 0.2% for the financial year to March against official estimates of negative 0.2 percent. Agriculture accounts for 15% of India's gross domestic product and though its share is falling, the sector's health is vital to the economy as 60% of India's 1.1 billion people rely on it for a living.

Reacting to Monday's data, Finance Minister Pranab Mukherjee said "I expect the current economic momentum to remain." He said he expected the economy to grow 8.5% in the fiscal year to March 2011.

Prime Minister Manmohan Singh said last week that India's economy, which has opened up to global trade in the past 15 years, must record 10%growth every year if severe poverty problems are to be tackled effectively.

The central bank has kept its monetary policy stance "accommodative" in order to stimulate growth, while seeking to tame inflation. India's year-on-year inflation cooled slightly in April, which also eases pressure on the central bank to hike interest rates immediately.

Wholesale price inflation, the country's main cost-of-living measure, slipped to 9.59% last month from 9.9% in March.

Copyright Agence France-Presse, 2010

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