NEW DELHI (AFP) – India said Friday that the economy expanded by a better than expected 6.7 percent in the past fiscal year, boosting the newly re-elected government which aims to restore growth to scorching levels.

The figure for the 12 months to the end of March was down from the nine percent posted a year earlier due to the effects of the global slump, but beat forecasts of as low as 6.0 percent.
Growth in Asia's third-largest economy was helped by unexpectedly strong 5.8 percent expansion in the fourth quarter -- far above market expectations of five percent -- on the back of hefty government spending.
“What you're seeing in these better-than-expected figures is essentially the effect of government spending,” said D.K. Joshi, principal economist at leading Indian credit rating agency Crisil.
Government consumption grew 22 percent year-on-year in the final quarter as authorities spent on social programs and construction, helping offset a sharp decline in private consumption and manufacturing.
Indian shares rose on the news. The benchmark Sensex index of 30 leading stocks was up 2.91 percent or 415.84 points at 14,711.85 in early afternoon trade.
Analysts still expect the economy to slow more in the year to March 2010 due to fallout from the global financial crisis, but said the worst appeared to be over and the deceleration may not be as severe as previously forecast.
Growth was seen at around six percent in the first half and closer to seven percent in the second. Next year, economists expect growth of eight percent.
The economy still has “significant pent-up demand for investment, especially in infrastructure and in affordable housing,” said Goldman Sachs economist Tushar Poddar.
The numbers gave cheer to the Congress-led government, which was swept back to power earlier this month on a poverty alleviation platform.
Finance Minister Pranab Mukherjee has said the government will make increasing growth its top priority to help India's “common man” -- even at the risk of ballooning an already big fiscal deficit.
He said “prophets of doom,” referring to ratings agencies, were focusing on increased public spending without realizing higher growth could get India back on the path of fiscal rectitude through stronger tax revenues.
New Delhi hopes to return growth back to nine percent and possibly push it into double-digits.
The country says it needs such growth to lift hundreds of millions of Indians out of deep poverty.
Friday's full-year figures were also helped by an upward revision of third-quarter growth to 5.8 percent from 5.3 percent and a stronger performance in the agriculture sector.
Agriculture accounts for nearly 20 percent of gross domestic product and provides a living for two-thirds of the population.
Analysts say the economy has been showing signs of a rebound, with car sales and cement output up due to aggressive interest rate cuts and a series of government stimulus packages.
Eyes will now be on the budget, expected in early July, to see how quickly the government moves on reforms such as opening up the financial sector to more foreign firms and disinvestment, seen as boosters to growth and fiscal health.
India has weathered the international slump better than many nations because of its still relatively inward looking economy, which has only opened up slowly since 1991.
Photo: Congress Party President Sonia Gandhi, center, talks with Indian Prime Minister Manmohan Singh during the swearing-in ceremony of new ministers at the presidential palace, in New Delhi, India, Thursday, May 28, 2009. (AP Photo/Manish Swarup)-