Bloomberg: India grows 9.6% in FY07 at fastest pace since '89

Business Times - 01 Feb 2008

India grows 9.6% in FY07 at fastest pace since '89

(NEW DELHI) India's economy expanded 9.6 per cent last fiscal year, the fastest pace since 1989, as rising incomes spurred demand for cars, mobile phones and motorbikes.

The growth rate for the year that ended March 31, 2007, was revised up from 9.4 per cent estimated earlier, the government said in a statement in New Delhi yesterday. The government also raised growth in the year ended March 31, 2006, to 9.4 per cent.

Faster growth may enable Prime Minister Manmohan Singh to cut the budget deficit and spend more on plans aimed at reducing poverty in a nation where the World Bank estimates more than half of the 1.1 billion people live on less than US$2 a day.

Asia's third-largest economy has expanded at more than 9 per cent since April 2005, as Ford Motor Co, Tata Steel Ltd and other companies increase output at the quickest pace in a decade to meet soaring demand from a growing Indian middle class.

'It is a matter of considerable satisfaction that despite global turbulence and heightened uncertainties, our economy has been growing at the rate of 9.4 and 9.6 per cent,' Finance Minister Palaniappan Chidambaram said in New Delhi yesterday. He expects the economy to expand about 9 per cent in the current fiscal year despite 'global uncertainties'.

Incomes in India are rising as companies like Intel Corp, the world's biggest semiconductor maker, and Accenture Ltd, the second-largest consulting firm, hire more people to benefit from technically skilled workers and lower wage bills.

Indians got the second-highest salary increase in the Asia- Pacific region last year. Wages rose an average 14.8 per cent in 2007 from 14.4 per cent in the previous year, according to human resources consulting firm Hewitt Associates Inc. -- Bloomberg