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Last Updated: Monday, 10 November, 2003, 11:03 GMT
Heavy rains boost Indian growth
Bombay traders
Strong growth has lifted the Indian stock market
India's biggest business lobby has raised its 2003 growth forecast after a good monsoon and solid farming output.

The Confederation of Indian Industry said it now expected the country's economy to expand by 7.2% this year, having previously predicted 6.5-6.8%

The group said heavier than usual monsoon rains had boosted agriculture, while industrial output was running ahead of forecasts.

Last year, a severe drought reduced India's growth rate by one percent.

The Confederation's forecast of 7.2% growth this year compares with the Indian Central Bank's latest forecast, also revised upwards, of 6.5% to 7%.

Growth record

The group called on the government to maintain India's strong growth rates by pressing ahead with economic reforms and infrastructure investment programmes.

"If this growth impetus continues for the next two quarters, India will be seeing the beginning of a much-needed investment cycle as companies start building larger capacities to meet greater demand," it said in a statement.

A 7% growth rate would see India returning to the strong expansion it experienced during the late 1990s, before slowing to a more moderate 5% over the last two years.

The country's strong growth record, which has brought it to the verge of economic superpower status, began with a series of market reforms in 1991 after decades of protectionism.

India's low labour costs and highly skilled workforce have also made it one of the main destinations for firms seeking to outsource customer service and information technology functions.

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