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Indian Economy Posts Strong Growth


India's economy has recorded faster-than-expected growth from April to June this year. The Indian economy is the world's second-fastest growing, after China's.

The Indian economy beat forecasts to grow by 8.9 percent in the first quarter of the financial year, April to June. That compared with growth of 8.4 percent for all of last year - the fastest in recent years.

The economy's strong performance came as a welcome surprise to the ruling United Progressive Alliance, or UPA, government. Finance Minister P. Chidambaram says this is the most rapid growth achieved in recent times.

"It is the UPA government's first quarter that has recorded the highest growth since 2000-2001," he said.

Analysts say a strong showing by both the services and manufacturing sectors contributed to the economy's rapid expansion. The manufacturing sector has been helped by huge government spending on the country's dilapidated infrastructure, including roads, power generation and ports.

At the same time, rising middle-class incomes continue to drive demand for consumer goods.

Economists say the good results from April to June show that the Indian economy is likely to maintain a growth of eight percent or better for a fourth year in a row.

The good news on the economic front has been matched by a recent rally in the stock market, which had fallen earlier this year along with many global markets. The Mumbai Sensex index rose to 12.453 points on Friday, recovering much of the ground it lost when it dropped below 9,000 in June.

Rajesh Jain, head of stock brokerage firm Pranav Securities, says the economy's good performance and strong corporate earnings have revived interest in the Indian stock markets among both domestic and overseas investors.

"If you look at the numbers for the first quarter, they have engendered tremendous expectations of results for the first half, and therefore have excited investment interest from across the globe, and also from across all classes of investors in India," said Jain.

Foreign investors pumped $2.6 billion into the Indian stock markets in the first half of this year.