Indian economy sees strong growth

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India's economy grew at an annual rate of 9.1% in the six months to September led by strong manufacturing growth, the government said on Tuesday.

Industry grew at a pace of 10.9% during the half year period and services saw a healthy 10.7% increase.

In November, data showed the economy grew a higher-than-expected 9.2% in the second quarter, leading the central bank to tighten its monetary policy.

Asia's fourth-largest economy has grown an average 8% in the last three years.

'Industrial resurgence'

Achieving an annual growth figure of 9% over the next five years has been set as an "ambitious but feasible" target by Prime Minister Manmohan Singh.

"An important and favourable development in recent times is the growing sign of an industrial resurgence, particularly in manufacturing," junior finance minister S S Palanimanickam said while presenting Tuesday's mid-year economic review.

He also said it was not clear that inflation had receded, two weeks after the tightening policies were introduced.

"It is too early to say - inflation has dipped only for two weeks," he said.

Inflation is running at an annual rate of 5.16%, down from 5.3% at the end of November.

Office space

However, property and housing prices and rentals remain a worry, racing ahead in a sector that shows signs of runaway growth.

Developers are buying up land to build malls, offices and housing developments, in a sector worth $12bn and growing at 30% a year, according to the Federation of Indian Chambers of Commerce and Industry.

Prices have risen sharply in the past five years, analysts say.

Rent and house prices rose by 45% in New Delhi in the first quarter of 2006, according to consultancy Colliers International.

Office space rental prices in Mumbai also jumped, increasing by up to a quarter over the three month period.