India sees 7.2 % growth as economy recovers

The projection for the 12 months ending March 2010 was contained in an estimate by the statistics office for use in drafting next year's budget to be presented at the end of February.

The economy “has clearly turned,” said chief government economic advisor Kaushik Basu while finance Secretary Ashok Chawla said growth this year could be even higher once data for the fiscal second half was known.

Monday's forecast marked an increase from the 6.7 percent growth posted in the previous financial year when India's economy was hit by the downturn in its major export markets.

HSBC economist Robert Prior-Wandesforde said this year's performance should “be trumped by an 8.5 percent increase” next year — close to the nine percent average annual figure clocked by Asia's third-largest economy before the global financial system went into a tailspin.

The International Monetary Fund forecast late last week that India's economy would grow by eight percent next year as it said the country had posted an “early and vigorous recovery” from the financial crisis.

A surge in manufacturing, forecast to expand by 8.9 percent this year, and services, seen rising by 9.9 percent, has offset a sharp drop in India's farm output.

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