India defies the odds

The Indian economy has ended the year in a much stronger position with a 7 per cent growth rate, Indian Equities Fund chief executive John Pereira said.

“The key take from 2009 is that India is a much stronger economy than many thought,” he said.

“During the last 18 months, India has faced many setbacks, including high inflation, terrorism and the withdrawal of foreign capital, yet risen to the challenge each and every time.

“This year’s performance and renewed stability bodes well for business and investment confidence in 2010.”

The September quarter saw India post a growth rate of 7.9 per cent, which has made it the world’s second fastest growing economy, Pereira said.

“The September quarter’s growth was the fastest in six quarters, driven largely by an increase in industrial production, particularly mining, manufacturing and electricity production,” he said.

“The growth is further considered remarkable because it occurred during a tough quarter for the agriculture sector, which has been hampered by a poor monsoon.”

Pereira said the move away from India’s traditional agricultural base to deliver growth shows how the country’s economy has matured and diversified.

“The economy is now more broadly diversified, with strengths in sectors such as energy, telecommunications and industrials,” he said. “And the Indian consumer is willing to spend.”

Indian shares are also reporting strong growth.

In Australian dollar terms, the Bombay Stock Exchange 200 Index has returned 47 per cent for the year to November 30.