Indian economy beats expectations

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The Indian economy grew by a staggering 8.9% on an annual basis in the July to September period - cementing its status as the world’s second fastest-growing major economy, behind China - which posted growth 9.6% year-on-year in the same period.

The rapid growth, fuelled by manufacturing, services and a strong farm sector, was better than the 8.2% expected by economists.

Manufacturing surged ahead by 9.8% on an annual basis, while construction saw an 8.8% increase and farming output grew 4.4%.

However, the economy still faces headwinds – the country’s inflation rate is the highest among the Group of 20 leading nations, due to soaring food costs.

Inflation currently stands at 8.58% - significantly above the central bank’s target of between 4% and 5%.

Earlier this month, the Reserve Bank of India (RBI) raised rates for the sixth time since the start of the year, in a bid to tame stubbornly high inflation in a thriving economy.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line.

Meanwhile, the country’s finance minister, Pranab Mukherjee, said India could achieve growth of between 8.5% and 8.75% in the current financial year.

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