Indian Economic Growth Gathers Pace

09 February 2006

Consumer power and credit are driving the Indian economy towards 8.1% growth this fiscal year, according to the federal government's financial forecasting.

The Reserve Bank of India has estimated growth for the year ending March 31 at between 7.5% and 8%, compared with 7.5% last year.

Some analysts, meanwhile, believe that in the next two to five years the nation's growth could exceed that of Asian economic power house China, which notched 9.9% in 2005.

Healthy consumer demand, because of rising middle-class incomes and higher credit growth, is underpinning the expansion.

D K Joshi, a senior economist with ratings agency Crisil says the central bank is likely to play a game of wait-and-see on interest rates. Reform measures included in the budget for the next financial year will indicate whether such growth can be sustained.

Data sourced from Wall Street Journal Online; additional content by WARC staff