GDP at 8.8 pc | Inflation at 8.1 pc | Fuel may go up by Rs 3

New Delhi: India's economy grew 8.8 per cent in the March quarter from a year earlier, beating forecasts and holding a steady pace in the second half of the fiscal year despite earlier monetary policy tightenings.

Annual growth for India's fiscal fourth quarter was higher than the median forecast in a Reuters poll of 8.2 per cent and the same as an upwardly revised 8.8 per cent in December quarter.

That left full fiscal-year growth at 9.0 per cent, higher than an earlier estimate of 8.7 per cent. It was the third successive fiscal year that India's economy has grown at 9 per cent or above, to be the world's fastest-growing major economy after China.

"The GDP numbers are a positive surprise and show that even though the industrial sector has been hurt by past interest rate hikes, the services sector continues to grow at a fast pace," said Sonal Varma, economist at Lehman Brothers.

"The question is whether the services sector can sustain this pace, despite industry slowing down. We have our doubts," Varma said, adding high oil prices, continued financial market turbulence and slowing world demand would provide headwinds.

The yield on the 10-year federal bond inched up after the data to 8.08 per cent from 8.07 per cent, while the partially convertible rupee held steady at 42.5850/5950 per dollar.

Farm output grew an annual 2.9 per cent in the March quarter compared with upwardly revised annual 6 per cent in the prior three months.

Manufacturing grew an annual 5.8 per cent in the quarter, slowing from 9.6 per cent in the December quarter, while construction growth jumped to 12.6 per cent from 7.1 per cent in the December period.

Trade, hotels, transport and communications showed robust annual expansion of 12.4 per cent in the three months to March after growing 11.5 per cent the prior three months.

FUEL PRICE HIKE OPTIONS

Oil Ministry is considering three fuel price hike options: The most optimistic option is a Rs 7 per litre hike on petrol and Rs 3 per litre for diesel. The second option is Rs 5 hike in petrol and Rs 3 in disel. And the third one is a moderate hike of Rs 3 on petrol and Rs 2 on diesel.