India economy grows 7.9 percent, shatters forecasts
- Source: Global Times
- [01:05 December 01 2009]
- Comments
India reported its best growth figures in 18 months Monday as government spending and record low interest rates helped Asia's third largest economy rebound from the financial crisis.
The 7.9 percent expansion in the quarter to September from a year earlier far eclipsed market forecasts and prompted the government to raise its growth expectations for the financial year to March 2010.
The growth figures, which underscored Asia's role in spearheading the global recovery, also stoked speculation about when India would begin exiting stimulus measures brought in to ride out the worldwide slump.
"As upside surprises go, this was a big one," said HSBC economist Robert Prior-Wandesforde, who called the fiscal second-quarter performance extraordinary.
Analysts said the data would stoke debate over when the central bank should raise borrowing rates from record lows as it seeks to fight rising inflation and keep economic growth on track.
Given the heavy influence of policy stimulus in the growth numbers, bank policymakers are unlikely to take swift steps to roll back stimulus, said Nikhilesh Bhattacharyya, an economist at Moody's economy.com.
"The central bank will most probably review economic conditions early next year," when the effects of the weak monsoon on the economy will be more visible, Bhattacharyya said.
The government has said a key concern is to steer the economy back to annual growth of nine-percent-plus, enjoyed before the global meltdown. Such expansion is needed to significantly dent poverty, the government says.
AFP
