1 September 2010 / AP, MUMBAI
India’s economy grew 8.8 percent in the June quarter, its fastest pace in over two years, as good farm and manufacturing output lifted growth back to its pre-crisis trajectory.
Economic doldrums this time last year helped bolster growth rates, which economists say will begin to ease as that effect wears off and central bank rate hikes begin to felt in Asia’s third-largest economy. India’s economic expansion averaged nearly 9 percent before the Great Recession, which dragged growth this time last year to 6 percent, the last quarter before India’s economy began to rebound. A CNBC-TV18 poll had forecast 8.9 percent growth for the April-June period and Tuesday’s numbers are unlikely to jolt the central bank from its path of monetary tightening. The Reserve Bank of India has raised key interest rates four times this year in a bid to tame high inflation, but economists say the effect of those hikes has yet to filter out to the real economy. Yes Bank chief economist Shubhada Rao said she expects interest rates to rise another half percentage point in the coming months. “Inflation concerns would still preoccupy monetary policy. We do see some more tightening left,” she said.
