India economy grew 8.6 percent in Jan-Mar quarter, best in 2 years as manufacturing rebounds.
Erika Kinetz, AP Business Writer
MUMBAI, India (AP) — A rebound in manufacturing and recovering farm output drove India’s quarterly economic growth to 8.6 percent, the best in two years as Asia’s third-largest economy returns to pre-crisis levels of expansion.
Growth for the financial year ended March was 7.4 percent, beating a government forecast of 7.2 percent, officials said Monday. The acceleration in the January-March quarter is likely to add to pressure on the central bank to raise interest rates to contain inflation.
India has rebounded from the global downturn faster than expected thanks to strong domestic consumption and investment, but two uncertainties loom: Rain and Europe.
As India’s farmers wait for the monsoon, hoping last year’s drought won’t be repeated, the nation’s business elite watches Europe — which accounts for a fifth of India’s exports — hoping its sovereign debt crisis won’t dampen the investment that’s needed to drive growth.
Manufacturing surged an unsustainable 16.3 percent off a low base for the March quarter, up from 0.6 percent a year earlier and its strongest performance in at least two years. Agriculture — which remains an important source of employment — limped along at 0.7 percent, up from the prior quarter’s contraction of 1.8 percent, but worse than a year earlier, when it grew 3.3 percent.
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