Indian economy expanded 8.4% in December quarter

India's economy grew 8.4% in the December quarter, official data showed, with a surging manufacturing sector helping defy more modest analyst forecasts.

The world's most populous country is already among the best-performing economies thanks to robust domestic demand and investment.

Thursday's results were significantly higher than the 7.0% projected by India's central bank and other, lower estimates by analysts.

"Double-digit growth in the manufacturing sector, followed by a good growth rate of construction sector" were responsible for the better-than-expected performance, India's statistics agency said.

The result is a fillip to the already commanding position of Prime Minister Narendra Modi ahead of a national election due in the coming months, which he is widely expected to win.

Modi said in a social media post the GDP figures showed "the strength of Indian economy and its potential" to help the country's 1.4 billion people "lead a better life".

His government has made stewardship of the economy a core aspect of its campaign, along with the ruling party's muscular Hindu-nationalist ideological pitch to voters from India's majority faith.

Earlier this month it announced a double-digit boost to infrastructure spending which finance minister Nirmala Sitharaman said would unlock five years of "unprecedented development".

Figures from Thursday's GDP release showed 11.6% growth in manufacturing, reversing sluggish demand in the sector seen through last year, while the construction sector grew by 9.5%.

India lifted its full-year growth forecast to 7.6% from 7.3% for the 12 months to March 31.

Thursday's data also revised its previous figures for the March and June 2023 quarters to above 8.0%.

India emerged from the Covid-19 pandemic to be buffeted by a new set of global headwinds, including tightening financial conditions and the effects of the war in Ukraine on global food and oil markets.

Its economy nonetheless grew 7.2% in the 2022-23 financial year, the second-highest among G20 countries.

The International Monetary Fund last month projected India's growth to remain strong through the next financial year due to "resilience in domestic demand" even as it predicted a slowdown elsewhere in Asia.

Demand has rebounded and inflation has receded from its 2022 peak of 7.8% since the Reserve Bank of India paused rate hikes last year, with its key benchmark repo rate steady at 6.5% since.

India overtook Britain in 2022 to become the world's fifth-largest economy and last year surpassed China to become the most populous country.