India grows faster-than-expected at record 9.4 percent

GROWTH: India's economy grew faster-than-expected at a record 9.4 percent pace in the year to March, beating a government forecast of 9.2 percent Thursday and raising hopes of more foreign investment.

The record-breaking performance was driven by upward revisions to manufacturing and services output in previous quarters and a jump in overseas investment, the central statistical organisation said.

In the previous fiscal year, India's economy grew 9.0 percent.

Analysts had forecast that strong industrial growth and a boom in services such as outsourcing would lift growth to as as high as 9.4 percent despite a series of interest rate hikes in the fiscal fourth quarter to tame inflation.

The government said the economy grew 9.1 percent in the three months to March and that the previous three quarters of the fiscal year had been revised upwards as new data became available.

The benchmark 30-share Sensex index was up 131.61 points or 0.91 percent to 14,452.91 in noon trade after the data was announced not far from its intraday record of 14,723.88 set on February 9.

"The overall Indian equity markets outlook looks strong with more money expected to pour in from overseas and local funds," said Shitin Desai, vice- chairman of DSP Merrill Lynch, after the data. The rupee, which has gained almost nine percent against the dollar this year was quoted at 40.73 to the dollar, slightly weaker than Wednesday's close.

The record growth in India is well behind Asian rival China on 10.7 percent in 2006 but the governments of both billion-plus population nations have warned of overheating in their economies and taken steps to tame demand.

AFP