India economy headed higher, reforms in sight: analysts

NEW DELHI, May 31, 2009 (AFP) – India’s economy is on the upswing with eyes now keenly focused on July’s planned budget for new market-opening moves by the freshly re-elected Congress government, analysts say. The country logged unexpectedly strong 5.8 percent growth in the final quarter to March 2009, against forecasts of 5.0 percent, figures late last week showed, prompting analysts to say the economy had turned the corner.

“We see a new growth cycle taking shape with the first stop seven percent and then eight percent,” said Rajeev Malik, economist at Macquarie Securities.

India’s economy expanded by 6.7 percent in the year to March 2009, down from nine percent a year earlier.

But the country of nearly 1.2 billion people is performing far better than many others caught in the global slump, thanks to its vast, resilient domestic market, hefty government spending and aggressive rate cuts, analysts say.

Foreign capital is pouring back into India with the benchmark Sensex share index near a nine-month high of 14,625 following a spurt in May after the Congress party was swept back to power with its biggest seat haul in 18 years.

The strong mandate allows the Congress to govern without th