New Delhi - India's economy is expected to grow 8.6% in the current fiscal year, a government statement said - its highest rate for three years despite a series of interest rate hikes.
The estimate for the year to March 31 was based on growth rates of more than 8% in key sectors such as manufacturing, construction, finance, real estate and business services, the Central Statistical Organisation (CSO) said.
It also reflected a sharp rise in farm output with agriculture expected to grow 5.4%, compared with just 0.4% in 2009-10.
India posted average annual growth of 9.5% between 2006 and 2008 before the global downturn slowed expansion to 6.7% in 2008-09.
The economy picked up last year to grow at an upwardly revised rate of 8%.
The figures came after Prime Minister Manmohan Singh warned that high inflation posed a "serious threat" to the country's growth momentum.
With New Delhi under pressure to curb inflation, particularly soaring food prices, the central bank has already hiked interest rates seven times in under a year, and is expected to raise them again next month.
Some analysts have voiced concern that the aggressive hikes could slow growth and jeopardise the government's goal of attaining the double-digit economic expansion it needs to significantly reduce poverty.
The release of the figures comes ahead of the federal budget to be presented on February 28 by Finance Minister Pranab Mukherjee for the fiscal year starting April 1.
Mukherjee will be watched keenly in his budget presentation to see how he plans to contain inflation and the fiscal deficit while keeping up the pace of growth.