India expects its fastest growth in almost two decades this fiscal year, underlining the country's growing clout in the world economy as manufacturing and service firms power ahead.
In its first official estimate for the current fiscal year ending in March, the government said on today that the economy, Asia's fourth-largest, was expected to grow 9.2 per cent.
"This year nominal GDP is expected to touch about $900 billion, and next year India is expected to cross $1 trillion in GDP - entering the big league," said Shuchita Mehta, chief India economist at Standard Chartered Bank in Mumbai.
The stock market hit a record high after the estimate, reflecting growing investor interest in globally ambitious firms such as Tata Steel, which last week made India's largest-ever foreign takeover.
The growth estimate was below the 10.7 per cent notched up by neighbouring rival China in 2006, but it was higher than the 8.6 per cent forecast by economists in a Reuters poll and above the central bank's forecast of 8.5-9 per cent.
Manufacturing output growth was estimated at 11.3 per cent compared with 9.1 per cent a year ago, while services, which make up more than 50 per cent of GDP, were seen growing at 11.2 per cent in 2006/07 compared with 9.8 per cent the year before.
Farming, which generates a fifth of GDP and employs about 60 per cent of the billion-plus population, was estimated to grow 2.7 per cent in 2006/07. Electricity was seen expanding 7.7 per cent and mining 4.5 per cent.
The government is on a drive to raise economic growth to 9 per cent and beyond in order to spread wealth among the 260 million poor and generate the revenue to bring down its large fiscal deficit.