India's economy will soon return to high growth, the government pledged Monday, as official data showed industrial output expanded at its fastest clip in seven months and car sales surged. President Pratibha Patil told parliament's opening session the economic fundamentals of Asia's third-largest economy "remain robust" and the government would "soon steer the country back to a high growth trajectory of 8.0-9.0 percent."
The economy is expected to grow by just 6.9 percent in the current fiscal year to March 31 - the weakest pace since the 2008 global financial crisis. India's economy grew by over nine percent for several years in the past decade and the Congress-led government has targeted a return to nine percent expansion in its latest five-year plan which starts in April 2012.
Experts have traditionally pinpointed nine to 10 percent growth as the minimum to substantially reduce the crushing poverty of hundreds of millions of Indians. The government's confident outlook was buoyed Monday by figures showing an unexpectedly strong 6.8-percent industrial production rise in January from a year earlier that far outpaced analysts' forecasts of a 2.1 percent increase.
The numbers, which defied interest rates at four-year highs and slowing global markets, marked a "strong recovery" from December's 2.5 percent production growth, Finance Minister Pranab Mukherjee told reporters. The output data, driven by an 8.5 percent leap in manufacturing, prompted analysts to review gloomy overall growth forecasts, but they warned against reading too much into the monthly numbers which are famously volatile.
The output figures coincided with data showing car sales climbed 13.1 percent year-on-year in February to 211,402 vehicles - the first time monthly car sales have crossed 200,000 - as the sector rebounded from a slump in 2011. Mukherjee is expected to set a growth target of 7.5 percent-8.0 percent for the next year to March 2013 in the mid-term budget.