India's economy grows briskly

New Delih - India's economy grew 8.8% on-year in the first quarter, the strongest performance in more than two years, powered by robust manufacturing growth, official data showed on Tuesday.

The economy, which has emerged strongly from the global downturn, was also boosted by better farm output, which expanded 2.8% in the three months to June.

Manufacturing grew 12.4%, while construction was up 7.5% and mining increased 8.9%, data from India's Central Statistical Organisation showed.

"There has been a strong performance by the industrial sector in the first quarter," Sujan Hajra, chief economist at Mumbai brokerage Anand Rathi Financial Services said.

But Hajra said the economy should slow in the three months to September after the latest industrial output figures pointed to a deceleration. "We are not going to see these kind of growth figures going forward," he said.

The last time the economy grew at a faster clip was in the final three months of 2007 when it expanded 9.7%.

The latest quarterly performance was largely in line with financial market forecasts.

The government had projected a strong first-quarter with growth easing back to around 8.5% for the full year to March 2011. The economy expanded 7.4% in the previous year.

India's still inward-looking economy is mainly driven by domestic demand, with exports accounting for less than 20% of gross domestic product.

Before the international financial crisis, India was averaging annual growth of nine percent.

The country escaped the worst of the global crisis, with its banking sector spared any major damage and now rising incomes have boosted domestic demand for cars, mobile telephones and other consumer durables even as exports are weak.

Prime Minister Manmohan Singh has said India's economy must attain double-digit growth if severe poverty among the country's 1.2bn people is to be tackled effectively.

The Indian economy could attain double-digit growth by 2013, the government has said.