http://www.timesofoman.com/innercat.asp?cat=&detail=7423&rand=fRx5ivt6NIC6m6CYbCO8eJdlMS
India expected to post record 9.2pc growth
AFP
Sunday, May 27, 2007 11:30:00 AM Oman Time
MUMBAI -- India is expected to confirm Thursday that its economy expanded at a
record 9.2 percent in the past financial year despite tighter monetary policy
by the central
bank to cool inflation.
Analysts predict the nation could even show a gain as high as 9.4 percent for
the year ended March as companies continued high production, more work was
outsourced to India and farmers recovered from poor rains a year earlier.
"Strong industry and services has aided growth. Farm production possibly was
also relatively strong," said Manika Premsingh, an economist with brokerage
Edelweiss Capital.
The government's own forecast of 9.2 percent was matched by several think tanks
including the New Delhi-based National Council of Applied Economic Research and
the country's central bank.
But there has been concern that a series of monetary tightening measures by the
Reserve Bank of India, which raised short-term lending rates twice in 2007 to
7.75 percent -- the highest in more than four years -- would act as a brake.
The central bank moves were aimed at slowing demand for goods such as cement,
steel and basic food items that have soared as consumers spend on cars, houses
and other goods.
Premsingh however said that because industrial growth has already been reported
up 11.3 percent for the year, up from 8.2 percent a year ago, enough data is
available to show the economy remains on track despite the rate hikes.
"With stronger than expected industrial production trends, we can look forward
to robust GDP as well," Premsingh said.
Investment in India's stock market has also shown no sign of dipping.
In the first five months of 2007, overseas funds pumped in 3.79 billion
dollars, on track to match last year's record 10.7 billion dollars.
The benchmark 30-share Sensitive Index has risen four percent this year and
closed at 14,338.45 points on Friday, near its all-time record high.
Analysts however expect economic growth to taper off in coming quarters to
levels slightly above eight percent for the fiscal year ending March 2008, or
lower than the central bank's estimate of 8.5 percent.
[Non-text portions of this message have been removed]
