March quarter growth seen strongest since Dec 07

Reuters | Wed May 26, 2010 | 6:30pm IST

India’s economy probably grew 8.7 percent in the March quarter from a year earlier its strongest since December 2007 the median forecast of 20 economists showed. Forecasts in the survey ranged between 7.3 and 9.4 percent. The predicted growth, on the back of robust manufacturing and a pickup in consumer spending, would be acceleration from an annual 6 percent expansion in the December quarter. A poll of 22 economists showed Asia’s third-biggest economy likely grew 7.2 percent in the financial year ended March 31, up from 6.7 percent in 2008/09.


  • Manufacturing production climbed 14.3 percent in March from a year earlier, compared with a fall of 3.3 percent in March 2009. Consumer goods output rose an annual 10.6 percent in March from 1.3 percent from a year earlier.
  • In April, the Reserve Bank of India raised key interest rates by 25 basis points for the second straight month to tame near double-digit inflation and said further hikes were likely as it moves policy towards pre-crisis settings.
  • Last week, RBI Governor Duvvuri Subbarao told reporters the central bank had not yet fully exited from its accommodative monetary stance. "We have begun policy exit; we have to traverse down that line," he said.
  • Industrial output grew 10.4 percent in the 2009/10 fiscal year, faster than an upwardly revised 2.8 percent in 2008/09.


  • Stronger-than-expected growth data could briefly push up bond yields and overnight indexed swap rates but investors are focused more on how the euro zone crisis may impact the central bank’s pace of policy tightening.
  • Traders will also await April’s infrastructure output growth data due on Monday, and the HSBC Markit Purchasing Managers’ Index for May expected a day later.
  • The yield on the benchmark 10-year government bond has fallen 28 basis points in May as worries about the euro zone’s debt crisis triggered demand for safe-haven debt.

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