NEW DELHI -- India's economy grew 9.3% in the quarter ended March 31 from a year earlier, marking a broad display of momentum on par with China's red-hot growth.
Growth in India's fiscal fourth-quarter -- fueled by surprisingly strong farm production and vibrant consumer spending -- beat the forecasts of most analysts as well as the official estimate.
Based on the buoyant quarterly result, the government's Central Statistical Organization lifted its figure of gross-domestic-product growth in the fiscal year that ended in March to 8.4%, up from an 8.1% estimate.
India's solid recent economic performance has raised the prospect of two Asian giants expanding at double-digit rates, spinning off new jobs and buying more of what the world grows and produces.
But while both China and India are emerging as growth engines for the global economy, commodity markets are showing the strain of their newly developed bulk. Both countries have been importing large amounts of crude oil while China is buying base metals, pushing up prices for these products. The nations' fast growth is likely to mean that high commodity prices won't ease soon.
"Supply and demand conditions are already tight," says Shuchita Mehta, an economist at Standard Chartered Bank in Mumbai.
Both India and China are trying to spur galloping growth to help lift hundreds of millions of residents -- mostly in rural areas -- out of poverty. China's economy grew 9.9% last year, and is expected to expand almost as rapidly in 2006. For his nation, Indian Prime Minister Manmohan Singh has set a goal of double-digit growth within three years.
But in trying to achieve accelerated growth, India's economy in particular faces a number of obstacles. Several industries remain relatively closed, shielding them from foreign competition -- but also fresh capital. India's dilapidated roads, seaports and airports have constricted the transport of goods, depriving needy areas of business activity and new investment.
Yesterday, Finance Minister P. Chidambaram said the Indian government would need to speed up market overhauls and the construction of infrastructure to keep up the current economic pace.
"While 8.4% is satisfactory growth, more reforms are necessary to sustain this growth," Mr. Chidambaram said after the latest economic figures were released. He added that he would be talking with the prime minister about ways to spur lagging sectors, such as mining, which grew only 0.9% in the fiscal year, down sharply from 5.8% the previous year.
India's strong economy is also prompting some worries about the country's current-account deficit. It has widened as more crude oil is imported at rising prices, wracking the country's currency, the rupee. On Wednesday, the rupee hit a two-year low against the dollar.
Mr. Chidambaram said India continues to hold huge foreign-exchange reserves and that its current account deficit was within manageable limits. Previously, he has said high oil prices will underpin inflation but won't hurt growth. The annual inflation rate is currently at about 4.3%, but India's central bank doesn't expect it to rise past 5.5% for the fiscal year that began April 1.
That relatively tame picture has prompted some government officials to play down signs the economy might be growing too fast. "I don't think there is any evidence of overheating," said Planning Commission Deputy Chairman Montek Singh Ahluwalia. "Macroeconomic indicators are in OK shape."
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