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Last Updated: Thursday, 31 May 2007, 07:17 GMT 08:17 UK
Manufacturing lifts Indian growth
Man cycling past car advertisement in Delhi
Manufacturing, including the car sector, is fuelling the economy
The Indian economy grew at an annual rate of 9.1% in the first three months of this year, driven by the strong manufacturing and service sectors.

The economic growth was less than market expectations of a 9.4% expansion, but higher than the 8.7% recorded in the last quarter of 2006.

Analysts now expect growth to slow slightly over the next year as the government aims to prevent overheating.

Manufacturing and services both grew by 12.4% in the first quarter of 2007.

Meanwhile, the construction industry expanded by 11.2%, while farming grew by just 3.8%.

'Clearly impressive'

"The growth rate is clearly impressive and is a very good performance," said HSBC economist Robert Prior-Wandesforde.

"But going forward there may be a softening in the growth cycle due to a recent spate of monetary tightening measures.

"We expect 2007/08 growth at 7.8%."

In March, India's central bank raised interest rates to 7.75% from 7.5%, its highest level in almost four-and-a-half years.

It was the second rate rise in three months as the bank sought to rein in inflation fuelled by the fast-growing economy.

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