Indian GDP surges upwards

Julian Harris
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INDIAN growth continues to surpass expectations, it was shown yesterday.

The economy expanded by 8.9 per cent in the three months to September, compared to the same time the previous year.

The boom surpassed an expected rise of 8.2 per cent, said economists.

And growth for the previous quarter was also revised up to 8.9 per cent. Growth in excess of eight per cent has been recorded for the whole of 2010.

Yet like neighbouring China, India is suffering from inflation, and the results increase the risk of further monetary tightening.

Wholesale inflation was recorded at 8.58 per cent in October, while consumer prices inflation (CPI) is running closer to 10 per cent.

On 2 November the Reserve Bank of India (RBI) increased the repo rate and reverse repo rate (at which the RBI borrows from banks) to 6.25 per cent and 5.25 per cent respectively.

India’s growth rates will stay high, and applying the brakes on inflation will remain the government’s “top policy priority,” said Vishnu Varathan of Capital Economics, “We continue to anticipate that the repo rate will be lifted by another 0.25 per cent in March 2011 and then by another 0.5 per cent by the end of 2011,” he said.