NEW DELHI, Nov 30 – India\’s economy grew a forecast-beating 8.9 percent year-on-year in the July-September quarter, data showed Tuesday, 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 dollars.
"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 percent "and maybe more" — higher than his initial 8.5 percent forecast — while the government\’s chief economic adviser Kaushik Basu said it was "not impossible" the country could log nine percent growth.
India posted scorching average annual growth of 9.5 percent between 2006 and 2008 before the global slump slowed expansion to 6.7 percent in 2008-09. The economy picked up pace last year to expand 7.4 percent.
The robust growth, propelled by manufacturing, services and a revived farm sector, was significantly above market forecasts of 8.2 percent 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.
"These numbers are reassuring, especially with monetary and fiscal stimulus being withdrawn — it shows the resilience of this recovery," D.K. Joshi, chief economist at ratings agency Crisil, told AFP.
Adding to the good news for the government, first-quarter growth was revised upwards to 8.9 percent year-on-year from 8.8 percent, 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 percent year-on-year in the same three-month period.
The Asian giants\’ growth figures could a harbinger of the 2011 global recovery scenario — "a tale of of two worlds, a buoyant East contrasting with a sluggish West," said Gerard Lyons, chief economist of Standard Chartered Bank in a client note.
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.
"Private consumption growth of close to 10 percent is pretty close to a historic high," Sujan Hajra, chief economist at Mumbai brokerage Anand Rathi Financial Services, told AFP.
Manufacturing grew 9.8 percent, construction expanded 8.8 percent while trade, hotels, transport and communication surged 12.1 percent from a year earlier. Farm output grew by 4.4 percent 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 percent of Indians still live below the poverty line of 1.25 dollars a day, compared with 16 percent 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 percent.