The Central Statistical Organisation released data showing that although the agricultural sector was hit by the driest rainfall season ever in the last 37 years, it had contracted by only 0.2 per cent. Strong growth in manufacturing helped compensate for the fall in agricultural output.
The manufacturing industry is expected to rise to 8.9 per cent from 3.2 per cent, while mining is set to grow at 8.7 per cent against 1.6 per cent from a year ago.
The third-largest Asian economy's capacity to maintain growth has raised analyst's expectations that the Indian government will rein in its fiscal stimulus.
The Reserve Bank of India has injected over $125bn into the Indian economy since September 2008.It even revised its inflation forecast for the financial year-end in March to 8.5 per cent.
The Indian economy is having a faster than expected recovery from the global financial downturn, with growth of 7.9 per cent until September 2009.
Morgan Stanley and Citigroup both expect India's GDP growth rate to rise over 8 per cent in the next fiscal year.
