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NEW DELHI, MAY 31 : India's economy in the January-March quarter grew a faster-than-expected 9.3 percent from a year earlier, data showed on Wednesday, raising expectations for further interest rate rises.
The expansion rate in the fourth quarter of India's financial year, which runs from April to March, was higher than the revised October-December rate of 7.5 percent and above analysts' forecast for 7.8 percent annual growth in gross domestic product.
Analysts said the faster pace of growth, led by strong farm, manufacturing and services output, boosted the argument for higher interest rates in July when the central bank reviews monetary policy.
"It's a big positive surprise on the growth front. The strong report comes on the back of higher-than-expected farm sector and manufacturing growth," said Shuchita Mehta, economist at Standard Chartered Bank in Mumbai.
"It strengthens the case for a rate hike in July and is negative for bonds."
Agriculture -- which accounts for about 23 percent of GDP -- grew an annual 5.5 percent in the January-March quarter, compared with a downwardly revised 2.9 percent annual growth in the previous three-month period.
Manufacturing output, which accounts for nearly 15 percent of GDP, expanded 8.9 percent, faster than a revised annual growth rate of 8.3 percent in October-December.
Full-year GDP growth for 2005/06 was revised to 8.4 percent from a previous estimate of 8.1 percent.
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