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India's economy grew faster-than-expected in the three months to June and at the strongest pace in two years, preliminary figures from the Central Statistics Office revealed Friday.



Gross domestic product grew 5.7 percent in the April to June quarter, which exceeded economists' forecast for 5.5 percent expansion. The economy grew 4.6 percent in the previous three months.

All main economic sectors recorded growth during the quarter with the services sector logging the biggest increase of 10.4 percent. That was followed by 10.2 percent growth in output in the utilities sector.

The crucial manufacturing and mining sectors rebounded during the June quarter, marking gains of 3.5 percent and 2.1 percent, respectively. Construction sector output rose 4.8 percent. Farm output increased 3.8 percent.

The Reserve Bank of India expects that economic growth in the range of 5-6 percent can be sustained in 2014-15.

The country's newly formed government, led by Prime Minister Narendra Modi, aims to achieve growth in the range of 7-8 percent within the next three to four years and bring the fiscal deficit down to 3 percent of the GDP.

However, if risks relating to the global recovery, the monsoon and geo-political tensions intensify, the balance of risks could tilt to the downside, the central bank warned earlier this month while leave key interest rates unchanged.

Service sector activity in India expanded for the third consecutive month and manufacturing growth hit a seventeen-month peak in July, the latest purchasing managers' survey showed.



Mr Modi has promised to make it easier to do business through speedier clearances and stable tax policies, allowing investors in Asia's third-largest economy hope of a rosier future after years of low growth and high inflation.

Mr Modi has to spur the economy to far higher rates of growth in order to provide jobs for the increasing numbers of young people joining the work force, and lift millions of Indians out of poverty.

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