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 Tuesday, 31 December, 2002, 17:19 GMT
Indian economy soars despite drought
Drought stricken farm land
Drought threatens India's economic growth
India's economy grew by 5.8% in the quarter ending September, putting it amongst the world's best performers.

Strong manufacturing and service sectors were driven by healthy domestic demand, but an ongoing drought could impact in the coming quarters.

The figures for the second quarter beat analysts expectations of 4.9% growth.

"The manufacturing sector has done well, but the real push has come from the services sector, mainly the financial segment, which has benefited from falling interest rates," said Indranil Pan of Kotak Mahindra Capital.

The drought is expected to dampened demand because about 70% of Indian's rely on farming income.

Growth fears

The manufacturing sector surprised with 6.4% growth, due to growing domestic demand and steady export orders, after increasing by only 2.6% in the second quarter last year.

But farming, hit by poor rainfall, was the only sector which reported no growth, after expanding 6.3% in the same quarter last year.

"Going forward, we could possibly see negative growth in the agricultural sector in the third and fourth quarters because of the poor monsoons, and that could effect the manufacturing sector," Mr Pan said.

India's central bank in October cut its full-year growth estimate to between 5% and 5.5%, the same as the governments, from a range of 6% to 6.5%.

The Indian economy is the third largest in Asia and the twelfth largest in the world.

See also:

09 Dec 02 | Business
03 Dec 02 | Business
22 Nov 02 | Business
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