India's economy probably expanded at the fastest pace in a year in the three months to June 30, as companies including Hyundai Motor India Ltd. increased production to meet rising demand at home and abroad.
Asia's fourth-largest economy expanded 7.2 per cent last quarter from a year ago, according to the median forecast of nine economists. The Bloomberg survey was conducted after Finance Minister P. Chidambaram in a Sept. 24 speech said the economy grew 7.1 per cent in the first quarter of the year ending March 31. The statistics ministry is due to release the official gross domestic product data in New Delhi at noon on Sept. 30.
Rising incomes and borrowing spurred by the lowest interest rates in 32 years are boosting sales of cars and houses in the world's second-fastest-growing major economy behind China.
The government is targeting 7 per cent growth over the next decade to end poverty in a nation where, according to World Bank estimates, almost a third its 1.1 billion people earn less than $1 a day.
"A combination of strong investment demand, exports and increasing local demand is helping the economy," said Ramya Suryanarayanan, an economist at Ideaglobal in Singapore. "India should be able to meet the 7 per cent growth target this year."
India's growth has averaged 6.1 per cent in the past nine years, helping double the nation's per capita income to 20,862 rupees ($474) in the same period, government data shows.
Industrial production rose 9.3 per cent in the four months ended July, the latest period for which figures are available, compared with 7.9 per cent in the year-earlier period.
Industry accounts for a quarter of the $661 billion economy.
Aluminum, Motorcycles
The Reserve Bank of India on July 26 held its key lending rate at the 6 per cent maintained since April 2003, the lowest since May 1973.
Profit at Hindalco Industries Ltd., India's biggest aluminum maker, increased 38 per cent in the quarter ended June 30, while Hero Honda Motors Ltd., India's biggest motorcycle maker, reported 7.4 per cent profit growth in the same period.
Demand for manufactured goods may accelerate this year as normal monsoon rains boost farm production, said D.H. Pai Panandiker, director general at RPG Foundation, an economic policy group in New Delhi. The June-September monsoon irrigates about two-thirds of India's cropland.
The government on Sept. 16 said output of food grains sown in the monsoon season may rise 2 per cent because normal rains allowed farmers to cultivate more land.
Unprecedented Momentum
"India is seeing an unprecedented growth momentum at the moment," said Anil Gupta, joint managing director at Havell's India Ltd., India's biggest maker of household switches.
"Exports are helping industry as well. You can see all that getting reflected in the stock market."
India's benchmark Mumbai stock exchange Sensitive Index, or Sensex, has risen about 55 per cent in the past year and closed at a record 8525.52 yesterday on the Mumbai Stock Exchange.
Exports, which account for about a 10th of the economy, rose 23 per cent from a year ago in the five months ended August to $35 billion, the government said Sept. 13.
Carmakers such as the Indian unit of South Korea's Hyundai Motor Co. shipped more vehicles to European and African countries, while companies including Tata Steel Ltd. increased sales to China.
"India's economic fundamentals look strong," said R.K. Gupta, who overseas about $46 million in Indian stocks at Credit Capital Asset Management Co. in New Delhi. "Overseas interest in Indian stocks will likely continue."
Overseas investors have bought a net $8.55 billion in stocks and sold a net $326.6 million in bonds this year. They invested a record $9.19 billion in stocks and bonds in 2004.
Oil, Growth
Finance Minister Chidambaram told Bloomberg News on Sept. 23 that rising oil prices are starting to affect India's economy and may pose a hurdle in achieving the government's 7 per cent growth target for 2005, which remains unchanged.
India's inflation rate accelerated to a six-week high of 3.53 per cent in the week ended Sept. 10 after the government raised fuel prices Sept. 6, making electricity more expensive and increasing the cost of transporting farm products.
Prime Minister Manmohan Singh's government partially passed on higher global crude oil costs to consumers by approving a 7 per cent increase in automobile fuel prices on Sept. 6, the first since June. Crude costs have risen 30 per cent in the past year.
The Reserve Bank in its July 26 monetary policy statement left its overnight borrowing rate unchanged at 5 per cent, saying inflation probably won't exceed its target of 5.5 per cent in the year to March 31. Since last October, the overnight reverse repurchase rate has been the central bank's main policy tool because commercial lenders have surplus cash.
Inflation
"Inflation is the most critical factor that can hurt India's growth momentum," said Sanjeet Singh, a fixed-income analyst at ICICI Securities Ltd., a primary dealer that underwrites government debt sales in Mumbai.
"The Central Bank may raise interest rates by a quarter point next month."
India's central bank is scheduled to announce its next monetary policy statement on Oct. 25.
The yield on the 7.37 per cent bond due in April 2014 rose 4 basis points, or 0.04 percentage point, to 7.03 per cent yesterday, according to data on the Bloomberg, on concern the central bank may raise interest rates. The price fell 0.30, or 30 paise per 100-rupee face amount, to 102.12.
Asia's fourth-largest economy expanded 7.2 per cent last quarter from a year ago, according to the median forecast of nine economists. The Bloomberg survey was conducted after Finance Minister P. Chidambaram in a Sept. 24 speech said the economy grew 7.1 per cent in the first quarter of the year ending March 31. The statistics ministry is due to release the official gross domestic product data in New Delhi at noon on Sept. 30.
Rising incomes and borrowing spurred by the lowest interest rates in 32 years are boosting sales of cars and houses in the world's second-fastest-growing major economy behind China.
The government is targeting 7 per cent growth over the next decade to end poverty in a nation where, according to World Bank estimates, almost a third its 1.1 billion people earn less than $1 a day.
"A combination of strong investment demand, exports and increasing local demand is helping the economy," said Ramya Suryanarayanan, an economist at Ideaglobal in Singapore. "India should be able to meet the 7 per cent growth target this year."
India's growth has averaged 6.1 per cent in the past nine years, helping double the nation's per capita income to 20,862 rupees ($474) in the same period, government data shows.
Industrial production rose 9.3 per cent in the four months ended July, the latest period for which figures are available, compared with 7.9 per cent in the year-earlier period.
Industry accounts for a quarter of the $661 billion economy.
Aluminum, Motorcycles
The Reserve Bank of India on July 26 held its key lending rate at the 6 per cent maintained since April 2003, the lowest since May 1973.
Profit at Hindalco Industries Ltd., India's biggest aluminum maker, increased 38 per cent in the quarter ended June 30, while Hero Honda Motors Ltd., India's biggest motorcycle maker, reported 7.4 per cent profit growth in the same period.
Demand for manufactured goods may accelerate this year as normal monsoon rains boost farm production, said D.H. Pai Panandiker, director general at RPG Foundation, an economic policy group in New Delhi. The June-September monsoon irrigates about two-thirds of India's cropland.
The government on Sept. 16 said output of food grains sown in the monsoon season may rise 2 per cent because normal rains allowed farmers to cultivate more land.
Unprecedented Momentum
"India is seeing an unprecedented growth momentum at the moment," said Anil Gupta, joint managing director at Havell's India Ltd., India's biggest maker of household switches.
"Exports are helping industry as well. You can see all that getting reflected in the stock market."
India's benchmark Mumbai stock exchange Sensitive Index, or Sensex, has risen about 55 per cent in the past year and closed at a record 8525.52 yesterday on the Mumbai Stock Exchange.
Exports, which account for about a 10th of the economy, rose 23 per cent from a year ago in the five months ended August to $35 billion, the government said Sept. 13.
Carmakers such as the Indian unit of South Korea's Hyundai Motor Co. shipped more vehicles to European and African countries, while companies including Tata Steel Ltd. increased sales to China.
"India's economic fundamentals look strong," said R.K. Gupta, who overseas about $46 million in Indian stocks at Credit Capital Asset Management Co. in New Delhi. "Overseas interest in Indian stocks will likely continue."
Overseas investors have bought a net $8.55 billion in stocks and sold a net $326.6 million in bonds this year. They invested a record $9.19 billion in stocks and bonds in 2004.
Oil, Growth
Finance Minister Chidambaram told Bloomberg News on Sept. 23 that rising oil prices are starting to affect India's economy and may pose a hurdle in achieving the government's 7 per cent growth target for 2005, which remains unchanged.
India's inflation rate accelerated to a six-week high of 3.53 per cent in the week ended Sept. 10 after the government raised fuel prices Sept. 6, making electricity more expensive and increasing the cost of transporting farm products.
Prime Minister Manmohan Singh's government partially passed on higher global crude oil costs to consumers by approving a 7 per cent increase in automobile fuel prices on Sept. 6, the first since June. Crude costs have risen 30 per cent in the past year.
The Reserve Bank in its July 26 monetary policy statement left its overnight borrowing rate unchanged at 5 per cent, saying inflation probably won't exceed its target of 5.5 per cent in the year to March 31. Since last October, the overnight reverse repurchase rate has been the central bank's main policy tool because commercial lenders have surplus cash.
Inflation
"Inflation is the most critical factor that can hurt India's growth momentum," said Sanjeet Singh, a fixed-income analyst at ICICI Securities Ltd., a primary dealer that underwrites government debt sales in Mumbai.
"The Central Bank may raise interest rates by a quarter point next month."
India's central bank is scheduled to announce its next monetary policy statement on Oct. 25.
The yield on the 7.37 per cent bond due in April 2014 rose 4 basis points, or 0.04 percentage point, to 7.03 per cent yesterday, according to data on the Bloomberg, on concern the central bank may raise interest rates. The price fell 0.30, or 30 paise per 100-rupee face amount, to 102.12.