The economy grew at its fastest clip in nearly three years in the quarter through June on strong manufacturing growth and farm output that may keep RBI on its policy tightening path. The 8.8% expansion is compared to a median forecast of an annual rise of 8.7% in a Reuters? poll and an 8.6% expansion in the previous quarter

SEAN CALLOW

SR STRATEGIST, WESTPAC INSTITUTIONAL BANK, SYDNEY

Strong headline numbers as expected but the monthly trend is less flattering and points to a softer Q3. Deceleration in y-o-y manufacturing growth from 17.9% in April to 7.3% in June highlights how the late 2009-early 2010 growth burst was always going to be difficult to sustain

GAURAV KAPUR

SR ECONOMIST, ROYAL BANK OF SCOTLAND, MUMBAI

The headline GDP growth number is largely in line with expectations. Strong manufacturing growth, coupled with a pick-up in services sector activity, had reinforced the overall growth momentum in the non-farm economy. That, combined with an improvement in farm sector output during the quarter, helped the economy clock close to 9% growth in Q1. Going forward, real GDP growth is likely to come off as the manufacturing sector growth has eased into single digit now and likely to persist. The services sector will continue to steer the economy to achieve close to 8.5% growth for the whole year. The farm sector?s contribution is also going to be much better this year. From an expenditure perspective, the pick-up in investment activity is also important for driving growth and managing the supply side constraints. This number will also encourage RBI to focus on controlling inflation and continue with the normalisation of monetary policy through rate hikes

RUPA REGE NITSURE

SR ECONOMIST, ROYAL BANK OF SCOTLAND, MUMBAI

Growth of 8.8% certainly shows good momentum. Its sustainability, however, is a concern given the fact that across-the-board cost pressures have increased. In recent months, industrial statistics are also quite mixed. While the PMI has been showing strong growth momentum, IIP numbers are showing some weakness. Hence, factoring in the pressures stemming from the cost side, I think the economy will grow about 8.2% to 8.3% for the year as a whole. Chinese problems are different as they are suffering from excess capacity but the Indian slowdown will primarily be triggered by excess demand pressures

SUJAN HAJRA

CHIEF ECONOMIST, ANAND RATHI FINancial SERVICES, MUMBAI

We can see a significant rebound in the industrial part of GDP. I think this is unlikely to sustain in the next quarter in particular as we are already seeing deceleration in industrial production and with earnings estimates for next quarter I also see some softening in the services sector GDP contribution. I do not think this will have any impact on monetary policy as strong first-quarter numbers are already reflected in significant tightening and the consensus was anyway that Q2 GDP numbers would show some softening. I do not expect any rate hike in September. As far as Asia is concerned, the slowdown in China is for a set of completely different reasons and I do not see that having any direct bearing on the country

MANAS PAUL

ECONOMIST, AXIS BANK, MUMBAI

The GDP data is on par with market expectation, so it is not a big surprise. Manufacturing growth was strong but it may see some slowdown due to base effect going ahead. Agriculture growth is picking up and if it continues to be better, it may lend some support in terms of spillover effect to the manufacturing sector. Since RBI had already taken these factors into consideration at its policy review, I don?t see any change in its rate stance post this data

MANORANJAN SHARMA

ECONOMIST, CANARA BANK

The GDP growth is good on higher farm sector growth. We expect GDP for the fiscal year at 8.5%. The central bank will continue with its interest rate hikes in the forthcoming (Sep 16) monetary policy. Inflation will remain higher due to pressure from the demand side

AVINASH GUPTA

ASSISTANT VICE-PRESIDENT, BONANZA PORTFOLIO

April-June GDP numbers were more or less in line with expectations boosted by manufacturing and financial services sectors. The growth is market neutral as the government has already forecast GDP at 8.5% for 2010-11 (April-March). However, growth from the third quarter onwards (October-December) will ease as the impact of the base effect will taper off

MADAN SABNAVIS

ECONOMIST, CARE RATINGS

The GDP numbers have definitely come up higher than our expectations and if this kind of tempo is maintained than GDP would definitely reach RBI?s target of 8.5% for the entire year. However, there is some concern the growth rate of industrial production may not be maintained throughout the year as industrial growth has slowed down a bit for June and July. But due to good monsoon, agricultural growth will be robust and that could make up for any slowdown in the industrial sector. I do not think RBI will take any policy action on September 16 as they will take into account the slowdown in industry. So, given that inflation is easing and growth is getting a bit tempered due to slowdown in industry, RBI may wait for some more time before it takes more action

SHUBHADA RAO

CHIEF ECONOMIST, YES BANK

Growth is slightly below our expectations due to the government-related services. Overall growth momentum will be maintained by strong bounce back in agriculture output and favourable monsoon. However, the manufacturing sector may witness some tempering of growth. We believe there is room for RBI to tighten interest rates. Uncertainty from the eurozone and the US are a matter of concern for growth