08/31/2012, 00.00
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Indian registers growth in economy

GDP up by 5.5% over the past three months, compared with forecasts of 5.2%. Markets boosted by cuts in RBI interest rates. Inflation still high, agricultural sector at risk over delay of the monsoon.

Mumbai (AsiaNews / Agencies) - Indian economy has grown more than expected with an increase of 5.5% of GDP in the last three months. The credit goes largely to the Reserve Bank of India (RBI, the central bank), which in April cut interest rates to support and boost the internal market, after a loss in exports due to the euro crisis . The statistics had predicted a growth of no more than 5.2% this quarter (June-July-August).

For analysts, however, this does not guarantee a long-term recovery of economic growth. Allegations of corruption and political deadlock looming around Prime Minister Manmohan Singh, continue to emphasize a lack of reform and agenda for development. In turn, the pressure on prices continues, despite requests made by the RBI to cut even more interest rates.

According to Robert Prior - Wandesforde, an economist at Credit Suisse Group AG in Singapore, "in the short term, it is difficult to be optimistic about India compared to other emerging economies, because inflation is still very high [in India]." In 2012, the Indian inflation rate averaged more than 7%, due to the cost of food and the depreciation of the rupee by nearly 17% against the dollar. In addition, the delay of the rainy season is likely to exacerbate price increases, and weigh on the growth of agricultural production.

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