Indian economy to grow by 7%

India’s economy is likely to grow by 7.2% in the current fiscal year, despite rising world oil prices and US interest rate hikes, a private industry report said today.

The report by the Confederation of Indian Industry, a group of the country’s top private businesses, cited growth in the industrial and services sector, a positive outlook for agriculture and broad-based export increases as reasons for the high growth figure in the fiscal year that ends next April.

Growth of over 7% in 2005/2006 would make India the world’s second-fastest-growing economy, after China, for the second consecutive year. Last year, India’s economy expanded at 8.5%, its highest in 15 years.

The agricultural sector was expected to grow by 3%, industry by 8.1% and the services sector by 8.3% in 2005/2006, the report said.

The government also expects economic growth to be around 7% during the year.

The report said India’s economic growth would have been higher but for high international oil prices and rising US interest rates.