Indian economy grows by 8.8% in Q1

India’s economy grew 8.8 percent year-on-year in the June quarter, the strongest performance in more than two years, powered by robust manufacturing growth, official data showed Tuesday.

The economy, which has emerged strongly from the global economic crisis, was also boosted by better farm output, which expanded 2.8 percent.

Manufacturing production rose 12.4 percent, while construction was up 7.5 percent and mining increased 8.9 percent.

The last time the economy grew at a faster clip was in the last three months of 2007 when it expanded 9.7 percent.

The government has already factored in high growth in the first quarter. The chief economic adviser to the finance ministry, Kaushik Basu, had forecast that the economy would grow at close to 9% in the first quarter, although it would ease to 8.4% in the full fiscal year. The government expects the economy to grow by 8.5% in the current fiscal, after growing at 7.4% in 2009-10.

The Reserve Bank of India has pegged the real GDP growth in the first quarter of 2010-11 at 8.7%, up from its earlier forecast of 8.1%.

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