India's economic growth accelerated last quarter as computer-related companies hired code writers and engineers, spurring spending on houses, travel and mobile phones.
Asia's fourth-biggest economy expanded 9.3 percent from a year earlier in the final three months of the year ended March 31, following a revised 7.5 percent gain in the previous quarter, the government said in New Delhi. That compares with a 7.9 percent median forecast in a Bloomberg News survey and is the fastest after China among the world's 20 biggest economies.
Hiring at companies including Dell Inc. and Infosys Technologies Ltd. may spur consumer spending and boost services such as banking and travel, which make up half of India's $775 billion economy. The government plans to increase investment in roads and ports, targeting 10 percent growth during the next decade to end poverty in the world's second-most populous nation.
``A lot of jobs are being created, particularly in software, resulting in higher spending on services and manufactured goods,'' said D.H. Pai Panandiker, president of RPG Foundation, an economic policy research group in New Delhi. ``Infrastructure spending will help sustain the growth momentum.''
Economic growth in India last quarter compares with a 10.3 percent pace in China's economy, which is almost three times larger, 3.6 percent in the U.S. and 2 percent in the dozen countries that share the euro.
Growth was 8.4 percent in the financial year ended March 31, the government said, faster than its Feb. 7 projection of 8.1 percent. The economy expanded 7.5 percent in the previous year.
Infosys, Tata
Companies including Infosys and Tata Consultancy Services Ltd., India's biggest software makers, hired about 229,000 workers in India in the year to March 31, according to National Association of Software and Service Companies, or Nasscom. Tata Consultancy plans to add 30,500 jobs this year and Infosys 25,000, the companies said separately in April.
Dell, the world's largest personal-computer maker, International Business Machines Corp., the world's biggest computer-services provider, and Microsoft Corp. are among overseas companies that are hiring workers in India where software programmers' wages are a sixth of those in the U.S.
Dell said in March it plans to double its workforce in India to 20,000 in three years. Microsoft said in December it plans to almost double its workforce in India to 7,000 in the next two to three years. IBM added 15,000 workers in India last year.
Outsourcing Business
India accounts for about half of the $40 billion transaction processing and other work that is sent abroad mainly by U.S. and European companies each year, according to Nasscom, boosting jobs.
Computer-software and business-process services accounted for 42 percent of all new positions advertised in January and February, according to the New Delhi-based Associated Chambers of Commerce and Industry.
India's software companies are expected to create 2.3 million jobs by 2010 and an additional 6.5 million indirectly, a McKinsey & Co. study said.
The government wants the economy to create 10 million jobs a year to improve incomes and lives of a third of India's 1.1 billion people who, according to the World Bank, live on less than $1 a day. About 8 percent of the 412 million people eligible to work are unemployed, according to the government.
Prime Minister Singh is increasing infrastructure spending by 24 percent to 992 billion rupees in the year that began April 1 to attract investment from manufacturers such as Intel Corp. Manufacturing makes up 16 percent of India's economy compared with 39 percent in China.
Steel, Cement
Demand for steel in India may more than quadruple in the next decade as investment in railways, ports and other infrastructure projects increases, the government estimates.
Record profits at companies such as cement maker Associated Cement Companies Ltd. and motorcycle maker Bajaj Auto Ltd. have helped India's benchmark stock index rise more than 50 percent in the past year, compared with a 25 percent gain in Morgan Stanley Capital International's Asia Pacific Asia excluding Japan Index.
Jet Airways (India) Ltd., the nation's biggest domestic airline, flew 15 percent more passengers in the year ended March 31. Mobile-phone companies including Bharti Airtel Ltd. added a record 5.26 million users in March.
Spending is also rising as improved harvests boost incomes of two-thirds of India's population that lives in rural areas. Agriculture accounts for about 22 percent of the economy.
`Growth Story Intact'
``India's growth story is quite intact because farm incomes have also been rising,'' said N. R. Bhanu Murthy, an economist at Institute of Economic Growth in New Delhi. ``Rural spending has been strong in the past year.''
The government said May 5 it expects production of grains such as rice to rise 5.8 percent in the 12 months to June 30 from a year earlier, boosted by normal rainfall. Output fell 7 percent in the previous year because of below-average rains.
``The about 8 percent growth rate last financial year has contributed to a very positive business sentiment,'' said Anand Mahindra, managing director at Mahindra & Mahindra Ltd., India's biggest tractor maker. ``However, rising interest costs and crude oil price will need careful monitoring. We look forward to the new fiscal year with measured optimism.''
The Reserve Bank of India has increased its key interest rate by a full percentage point since October 2004 to 5.5 percent to curb inflation amid rising fuel costs. The central bank expects economic growth to slow to between 7.5 percent and 8 percent this year.
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