NEW DELHI: The country's economy expanded at a scorching pace of 9.3 per cent in the first quarter this fiscal while inflation fell to its lowest level in 15 months, but analysts said growth may slow down in the coming quarters.

The GDP growth was driven by manufacturing, construction and services sector and even agriculture sector, a key area of concern for the government, rose by nearly four per cent. The high growth in the first quarter comes on top of 9.4 per cent expansion during 2006-07, the fastest in 18 years.The government's fiscal steps and RBI's monetary interventions also pulled down inflation to below four per cent at 3.94 per cent during the week ended August 18 for the first time in more than 15 months.Both the GDP and inflation figures, released by the government, came a day after the Reserve Bank said inflation remained a downward risk due to high oil prices.

Though GDP growth rate of 9.3 per cent seems to be slow down compared to 9.6 per cent during the first quarter of 2006-07, the fact that it was on a high base pushed the stock markets with the benchmark Sensex rising over 200 points."Although provisional estimates of 9.3 per cent GDP growth during first quarter are shade below than growth last year (in corresponding period), but given the circumstances on account of external situation, they are quite satisfactory," Finance Minister P Chidambaram said.Planning Commission deputy chairman Montek Singh Ahluwalia said, "Growth has widely been expected to fall. RBI has expected an 8.5 per cent growth for the year. So, 9.3 per cent growth is good." However, a few analysts such as HDFC Chief Economist Abheek Barua differed with Chidambaram.

"There would be moderation in growth trend in the coming quarters. It would not be as high as first quarter. Despite this my sense is that the GDP would be in the range of 8.5-8.8 per cent for the current fiscal," Barua said.Ahluwalia also said the GDP growth for this fiscal, the first year of the 11th five-year plan, is expected to be 8.5-9 per cent. "If this rate is sustained, it will be considered good," he said.As per the official data released, manufacturing sector grew by 11.9 per cent, lower than 12.3 per cent recorded during the first quarter of 2006-07. Agriculture and allied activities grew by 3.8 per cent during April-June this year.

Trade, hotels, transport and communication registered a growth rate of 12 per cent. Finance, insurance, real estate and business services grew at 11 per cent; while power gas and water supply grew by 8.3 per cent compared to 5.8 per cent.Analysts said the farm sector growth came on a low base of 2.8 per cent in the corresponding period of last year, but the fact it is close to the target of four per cent, reflected that if the trend continues it would not be impossible for the economy to grow at 9 per cent for the whole fiscal.Chidambaram said as long as savings and capital formation remained high, it supported the hypothesis that investment would remain buoyant and this would drive the economy

."I am confident that GDP growth rate will remain close to 9 per cent this year as well," he said. The finance minister's expectation is also in line with International Monetary Fund's projections, which recently revised India's growth rate for 2007 to nine per cent from its earlier estimate of 8.4 per cent.