India`s growth beats expectations
India's gross domestic product (GDP) grew by a better-than-expected 6% in the first quarter of 2002-03, but analysts believe growth in coming quarters could be hit by the worst drought in 15 years. The Indian economy, the world's 12th-largest, started emerging from a slowdown earlier this year and a series of data in recent months has pointed to recovery gathering pace. The figures for the first quarter to June put the Indian economy among the fastest-growing in the world and beat economists' forecasts.
The country's economy grew 3.5% in the first quarter of 2001-02. India has also released data on the balance of payments for the first quarter and its fiscal deficit up to August. For the third consecutive quarter, the data showed a surplus in the balance of payments, helped by a narrower merchandise trade deficit and a surge in software exports. Government finances also showed improvement as India's fiscal deficit, among the largest in the world, was helped by buoyant tax revenues, income from state-run firms and privatisation receipts.
Data showed the fiscal deficit at the end of August was US$11.7 billion, representing 40.9 percent of 2002-03 budget estimates. It stood at 48.2 percent of the target, in the same month the previous year. The International Monetary Fund (IMF) has expressed concern about India's large fiscal deficit, which it said left little room for economic stimulus and could hurt growth.
The better-than-expected GDP, balance of payments and fiscal deficit figures come against the backdrop of a recent downgrade by international credit rating agency Standard and Poor's of India's local-currency ratings to "junk" levels.
The government expects the country's economy to grow 5.5% in the year to March next year, but the nation's most severe drought in 15 years is seen hitting the farm sector. The economy grew 5.4% in 2000-01.
