India’s economic growth slows to 8.2%

HONG KONG (MarketWatch) — India’s economic growth slowed to 8.2% in the last three months of 2010 from the year-earlier period, as the manufacturing sector was held back in the wake of multiple interest-rate increases by the central bank amid rising prices.

The expansion was below the 8.6% growth estimated in a survey of economists by Reuters, and also lagged the 8.9% increase recorded in the previous quarter ended Sept. 30.

The agriculture, forestry and fishing sectors, which together employ a majority of India’s workforce, grew as much as 8.9% during the latest quarter, due to a sharp increase in the production of coarse cereals and pulses, according to official data released Monday.

But the manufacturing sector lagged behind, growing at a relatively modest 5.6% during the period.

The slowdown came after the Reserve Bank of India raised its benchmark lending rates in seven equal installments of 0.25 percentage point since the beginning of 2010 to check rising prices.

Indian stocks and the rupee advanced, however, as investors awaited details of the federal budget for the new fiscal year beginning April 1, 2011.

The 30-stock Sensitive Index, or Sensex /quotes/comstock/29m!sensex (XX:SENSEX 17,790, +88.98, +0.50%) , rose 1.4% to 17,940.16, while the U.S. dollar /quotes/comstock/21o!2220413 (USDINR 45.1800, -0.0750, -0.1657%) slipped to 45.21 rupees from 45.32 rupees the previous session.

Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.