India’s first-quarter GDP up by 9.1% in 2007

7 June, 2007: India’s economy grew by 9.1% in the January-March 2007 quarter compared to the same period the previous year.

This growth in the Gross Domestic Product (GDP) is expected to the push the full-fiscal year growth to its strongest pace in about two decades, reports Reuters.

Data released on May 31, 2007, put the growth for the fiscal year ended March 2007 at 9.4%, which is higher than the government’s estimate of 9.2%. It was the strongest fiscal year growth since 1988-89, when India’s economy grew by 10.5%.

The figures stress India’s rise as a global economic power – a fact which was emphasised earlier in 2007 when Tata Steel bought Anglo-Dutch steel maker Corus in the biggest international takeover in Indian history.

The annual growth rate of 9.1% for the January-March quarter was below a median forecast of 9.4%, but higher than an upwardly revised 8.7% in the October-December quarter 2006.

Analysts and officials expect the economic growth in India – Asia’s third-largest economy – to stabilise in 2007-08 around 8.5%.

The Reserve Bank of India (RBI) raised interest rates five times since June 2006 and increased banks’ reserve requirements three times since December 2006 to check inflation and credit growth.

RBI left its main lending rate steady at 7.75% at a policy review in April 2007, but said it would act swiftly if needed.

The data released on May 31, 2007, shows that the manufacturing and service sectors surged ahead while agriculture lagged.

Agriculture, which generates almost a quarter of the economic activity, grew by 3.8% in January-March 2007 from a year earlier, compared with 1.5% in the previous quarter.

In contrast, the manufacturing sector grew at its strongest annual pace since India began publishing quarterly growth data in 1997. The sector, which accounts for over 15% of GDP, grew by 12.4% over a year earlier.