India’s economy grew more than expected last quarter, easing pressure on Prime Minister Manmohan Singh to revive consumer demand as he starts his second term in office. Stocks and the rupee gained.
Asia’s third-largest economy expanded 5.8 per cent in the three months to March 31st, matching the revised gain of the previous quarter, the statistics office said in New Delhi today. Economists were expecting a 5 per cent increase.
Growth is still almost half the pace at which India expanded in the past five years and Finance Minister Pranab Mukherjee this week pledged to boost spending in July’s budget.
The economy is already showing “some signs” of revival from interest-rate cuts and fiscal stimulus worth 7 per cent of gross domestic product, Minister Mukherjee said.
“A 5 per cent growth rate isn’t enough to absorb the rise in working population, risking unemployment,” said Robert Prior-Wandesforde, senior Asian economist at HSBC Holdings Plc in Singapore.
“It’s important to see how the issue is tackled in the budget - too much in the way of giveaways may lead to further sell-off in the bond market.”
Bloomberg