India's economic performance inFY2009/10 shows that the recovery from the slowdown duringthe global financial crisis is well underway. India'sGross domestic Product (GDP) growth in FY2009/10 has beatenexpectations by reaching 7.4 percent compared with 6.7percent in the previous year. In particular, agriculturalsector growth was better than feared with a slightlypositive growth rate despite the worst monsoon shortfall inthree decades. Strong growth in the fourth quarter pushedannual GDP growth to 7.4 percent in 2009-10. Fourth quartergrowth reached 8.6 percent (y-o-y), the highest quarterlygrowth rate since the end of FY2007/08. The industrialsector's robust recovery beat expectations. Growth inthe last quarter of fiscal year FY2009/10 was anunexpectedly high 13.3 percent resulting in over 12 percentgrowth in the second half of year, nearly double the 6percent growth witnessed in the first half. Higher inflationmars the bright picture, but there are clear indications ofmoderation. Inflation as measured by the wholesale priceindex (WPI) averaged 10 percent during February-May 2010.India's recovery after the slowdown seems wellunderway. Growth is projected to climb to 8-9 percent in thenext two years. These growth rates are achievable without arenewed build-up of inflationary pressure as long asagricultural growth returns to trend, infrastructureconstraints are alleviated, and international prices remainstable. Over the next year, sources of growth will shiftfrom fiscal stimulus to manufacturing and, possibly arecovering agriculture.
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