NEW DELHI: India's economy will grow by 4.3% this year and 6.1% in 2010 according to Morgan Stanley, although the company also warns that the pace of annual expansion could slow to 3% if the downturn takes a "bearish" path.

While Morgan Stanley's most optimistic reading for the Indian economy is growth of 5% this year and 7.4% in 2010, it argues a combination of the global economic climate and the results of the Indian election in May will determine the final growth rate.

Sherman Chan, an economist at Moody's, also warns that India's recovery will not begin in full until the second quarter of next year, with the government's financial stimulus package only being likely to "minimise the magnitude of a further slowdown."

As previously reported, India's economic expansion slowed to 5.3% in the last quarter from 8.9% in the year-ago period, but commerce minister, Kamal Nath, recently said "I believe the worst is over."

One area of recent improvement has been in car sales, which declined by 7% in January but improved 18.8% year-on-year last month.

Maruti Suzuki reported that total sales rose by 19%, to 70,625 units in February, while Hyundai's sales increased by 45% to 21,215 units.

Honda Siel also registering a rise of 48% to 5,579 units sold, and Tata Motors posted its first positive passenger vehicles figures since October 2008, up 1.5% to 19,039 sales overall.

Data sourced from Times of India/Business Standard; additional content by WARC staff