India's Policymakers May Not Withdraw Stimulus Now

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Encouraged by the strong GDP data, India's policymakers may not withdraw stimulus measures now, until economic conditions are reviewed early next year, media reports said.

The country's Gross Domestic Product, or GDP, for the July-September quarter stood at 7.9%, above the consensus of 6.3% due to the economic recovery gaining momentum and rising industrial production. It is the fastest pace of growth in six quarters. In the previous quarter the GDP stood at 6.1%.

The Planning Commission has said that the forecasts for 2009-10 financial year may have to be revised upward after the latest GDP figures indicated an improvement in the economy.

Nikhilesh Bhattacharya, associate economist of Moody's Economy.com., said that the effects of the weak monsoon and drought would be more visible in the next quarter. He added that at present the growth seems to be mainly driven by policy stimulus.

Even after accounting for the effects of weak agricultural conditions in recent months, year-on-year real GDP is likely to increase further in the fourth quarter, helped by increase in consumer and business confidence as well as government spending, the report added.

(Market News Provided by RTTNews)