Indian economy continues to grow

Manufacturing has compensated for weakness in agriculture

India's economy grew 6.1% in the second three months of the year compared with the same period last year, which was slightly better than had been expected.

The official gross domestic product figure was down from the 7.8% growth seen in the second quarter of 2008.

Although growth has slowed from last year, the economy is still expanding faster than most other countries.

Indian economists said weakness in agriculture could be offset by growth in manufacturing later in the year.

Finance Minister Pranab Mukherjee has projected growth of "six percent plus" for the financial year to March 2010. That is down from the 6.7% logged in the previous full financial year.

Gobal issues

"For the year as a whole, the growth should be around 6.5% to 7% as recovery is showing elsewhere also," said Amol Agrawal, economist at IDBI Gilts in Mumbai.

"But agriculture is a big dampener and the growth forecast is again based on global recovery. If that stumbles again, then one can't say."

During the quarter the manufacturing sector expanded 3.4% from a year earlier, while farm output grew by just 2.4%, compared to 2.7% in the first three months of 2009.

The economy has been hit recently by the weakest rainfall since 1972, with drought-like conditions affecting 40% of the country's districts.

The monsoon rains are a lifeline for agriculture, which supports much of the Indian population.