India GDP Surges 8.9% in the Third Quarter

India's domestically-powered economy grew more than expected in the September quarter, defying weakness elsewhere and putting pressure on the Reserve Bank of India (RBI) to tighten monetary policy although a rate increase next month still looks unlikely., Reuters 12/2/2010 9:09:35 AM

Annual gross domestic product grew 8.9 percent in the September quarter -- matching the revised figure for the previous quarter.

Consumer price inflation eased to an annual 9.7 percent in October from 9.82 percent the previous month, data showed on Tuesday. Wholesale price inflation, which is more closely watched as it covers a higher number of products, eased to 8.58 percent in October from 8.62 percent a month earlier.

Investment growth slowed on an annualised basis to 11.1 percent from 19 percent in the previous quarter, while annualised private consumption accelerated to 9.3 percent from 7.8 percent in the previous quarter, pointing to inflationary risks.

The services sector, which accounts for over 50 percent of GDP, grew 9.8 percent in the September quarter, higher than 9.3 percent in the previous quarter.

Signs of easing inflation, a fragile global economy and weaker industrial output in September were likely to forestall any rise in rates in the near-term, some analysts said. "Unless the full year growth looks likely to cross 9 percent, the central bank is unlikely to get aggressive again in raising rates," said Anjali Varma, economist at MF Global in Mumbai.

Industrial output growth -- a key indicator of growth momentum -- in Asia's third-largest economy slowed unexpectedly in September to 4.4 percent from a year earlier, down from the previous month's upwardly revised 6.92 percent growth.

India GDP Surges 8.9% in the Third Quarter