India's economy grew a forecast-beating 8.9% year on year in the July to September quarter, underscoring the country's brisk recovery from the global financial crisis.
The healthy numbers brought temporary cheer to the Congress-led government, buffeted by a string of scandals including a damaging telecom corruption scam that could have cost the treasury up to $40 billion.
'Amid all the depressing news, there is a good news,' Finance Minister Pranab Mukherjee said. He said growth for the fiscal year to March 2011 could reach 8.75% 'and maybe more' - higher than his initial 8.5% forecast - while the government's chief economic adviser Kaushik Basu said it was 'not impossible" the country could log 9% growth.
India posted scorching average annual growth of 9.5% between 2006 and 2008 before the global slump slowed expansion to 6.7% in 2008-09. The economy picked up pace last year to expand 7.4%.
The robust growth, propelled by manufacturing, services and a revived farm sector, was significantly above market forecasts of 8.2% expansion.
The healthy figures came despite the rapid unwinding of massive fiscal and monetary stimulus measures put in place in the aftermath of the global crisis to help shield the country from its impact.
Adding to the good news for the government, first-quarter growth was revised upwards to 8.9% year-on-year from 8.8%, data from the Central Statistical Organisation showed.
The South Asian country is the world's second fastest growing major economy, behind regional rival China, which logged growth of 9.6% year on year in the same three month period.
Surging vehicle and other consumer product sales helped to power the strong Indian performance, which is underpinned by rising incomes in the nation of 1.2 billion and widening access to credit.
Manufacturing grew 9.8%, construction expanded 8.8% while trade, hotels, transport and communication surged 12.1% from a year earlier. Farm output grew by 4.4% thanks to a bountiful monsoon.
India has weathered the worldwide downturn better than other nations due to its still mainly domestically focused economy. Global investors have been pouring billions of dollars into India's stock market, seeking exposure to the country's strong growth, as industrialised economies are still struggling to emerge from the downturn.
The government aims to achieve double-digit expansion within the next couple of years to reduce deeply entrenched poverty. It seeks 'inclusive growth' to embrace those left behind by India's boom. More than 40% of Indians still live below the poverty line of $1.25 a day, compared with 16% in China, according to the World Bank.
Economists say India's strong performance could prompt the central bank, which has hiked interest rates six times since the start of the year, to press ahead with monetary tightening to curb inflation of more than 8.5%.
