Consumers underpin India's growth
NEW DELHI, India -- India's economy grew a robust 5.8 percent in the July-September quarter, boosted by a strong manufacturing sector and domestic demand.
With 1.1 billion people, India is the world's second most populous nation after China, and is Asia's third-largest economy behind Japan and China.
The latest figures, which beat the consensus forecast of 4.9 percent, makes it one of the world's fastest growing economies.
The strong third-quarter result follows growth of 5.3 percent in the June quarter and came despite fears a severe drought might derail expansion.
The government expects India's economy to grow about 5.0 to 5.5 percent in the year to March 2003.
That would rank it with other high-growth performers in Asia such as China, South Korea and Vietnam, which are seen growing at 7.5 percent, 7.0 percent and 6.2 percent respectively this year.
Regional analyst IMA Asia said in its January outlook that the devastating drought in rural India, rated the worst in 15 years, had eased somewhat following late rains in August and September.
IMA is predicting a more conservative growth figure of 4.8 percent for the year to next March, and 5.5 percent for the 12 months after that.
It says the Indian currency, the rupee, is still undervalued, and its sustained appreciation against the U.S. dollar is "beginning to challenge the conventional premise that the rupee can only depreciate".
The rupee is trading at 48.07 to the dollar Wednesday.
T.K. Bhaumik, an economist with the Confederation of Indian Industry, told Reuters news agency that India's manufacturing sector was continuing its strong growth.
He said this, along with services sector growth, would push GDP ahead in the 2002-03 year.
The manufacturing sector outperformed expectations, growing 6.4 percent as domestic demand picked up and export orders were steady despite a global demand slowdown.
The financial and insurance services sector grew 8.9 percent, as more people bought new cars and financed houses taking advantage of falling interest rates.
Farming, hit by poor rainfall, was the only sector showing no growth, after expanding 6.3 percent in the second quarter of 2001/02.
"I was expecting a two- to four-percent decline in the farm sector output. The flat numbers are a surprise," Riyaz Khan, economist with the Center for Monitoring Indian Economy, told Reuters.
"Going forward, agriculture will be the joker in the pack in determining the full year's GDP growth rate."
Sales of automobiles and consumer non-durables, from shoes to shampoos, have grown at a scorching pace, confirming consumer demand remained intact despite the drought.
India needs high growth to cut poverty levels in a country where more than quarter of its population earns less than a dollar a day.
Reuters contributed to this report.