The latest growth figures reiterates the fact that Asia’s third-largest economy did not lose momentum during the period, despite the slow pace of global recovery and concerns of another round of economic downturn. The country also had to deal with the near double-digit inflation, which demanded strong fiscal measures.

The Reserve Bank of India was in a dilemma earlier whether to go all out in containing the runaway inflation without harming the amazing run of the economy. The central bank has stated time and again that containing inflation is being giving precedence to other policy objectives and followed it up by hiking interest rates four times in the last four months. The fact that economy is sound and steady gives RBI ample space to maneuver and focus on inflation-control fiscal tightening measures.

The consistency in economic growth is mostly due to the buoyancy in the domestic consumer market. This is thoroughly reflected in the automobile sales, which rose by 38% in July, forcing car manufacturers to run their factories to the optimum capacity.

The manufacturing sector witnessed a robust growth of 12.4% y-o-y. This growth is substantial when compared to the growth percentage of 3.4% for the same period last year. The agriculture sector expanded by a healthy 2.8% during the quarter. The trend is expected to continue on good monsoon forecast.

The sturdy growth may prompt RBI to go in for another rate hike during its quarterly policy review scheduled on September 16.

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Prime Minister Manmohan Singh is scheduled to attend the G-20 Summit of world countries to be held in Toronto, Canada this weekend. He will also meet his counterparts in member countries on the sidelines of the summit, including the newly appointed David Cameron (Britain) and Naoto Kan (Japan). In a statement issued before he left for the summit, Mr. Singh made clear India’s stance on the proposed bank tax and stimulus exit.

“We have to be conscious that the recovery is still fragile and uneven. New worrying signs have emerged in the Euro zone,” the statement said.

India finds an ally in the United States in the stimulus exit issue, while European countries such as Britain and Italy have announced measures to raise taxes and cut down expenditure. The US has warned member countries against hasty stimulus exit to avoid repeating the mistakes of ‘30s. Canada is rooting for halving budgetary deficit by 2013.

India is planning to scale down its fiscal deficit to 5.5% of GDP this year from the projected figure of 6.7%. This is being achieved by withdrawing some of the stimulus packages introduced during the economic downturn during 2008-09. India maintains that the path to fiscal consolidation is different for each country depending on the present status of the economy and there is no need for uniform action.

The proposal to tax all bank transactions is another bone of contention that will come up in the summit. India is opposing this move, saying it is unfair to “tax everybody to pull some countries out of the current crisis”. Countries like Britain are behind the proposal. India had earlier expressed its opposition to the bank tax at the G-20 Summit held at Busan, South Korea.

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Exports were down for the past 13 months and were at its worst in May 2009 when it dipped by 39 percent. Though the exports showed positive growth between December and February, the growth was not significant to cover the losses made during the previous months. Government’s stimulus package and policy interventions like interest subsidy for exporters, more sops like market-linked incentives have helped exporters counter the global demand slowdown. Exports increased by 34.8 percent to USD 16.09 billion in February 2010 when compared to USD 11.94 billion during the same period last year.

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Last decade saw India emerge as the hunting ground for talent among multinational corporations. The last two recessive years witnessed the rate of hiring come down due to the general downsizing trend. With the world slowly but surely emerging out of economic downturn, hiring spree is back.

The rise in outsourcing exports is prompting top Indian outsourcing companies like Infosys Technologies, Tata Consultancy Services and Wipro to restart their headhunting in bulk. Wipro took in almost 5,000 staff during the last quarter. This is a complete turnaround from the previous quarter, when it had downsized by above 600.

There is good news for students seeking campus recruitments. TCS is proposing to recruit 11,000 professionals in the present quarter, mostly freshmen as trainees. Last quarter, TCS added more than 7000 to its fold. Infosys is also not far behind with plans to hire 6,000 professionals.

Multinational companies are looking towards India to fill positions across continents and profiles. Recruitment firms are expecting demand for about 100 top-level positions and a substantial number of lower level placements for Europe, Africa, Middle East and Asia-Pacific regions.

Africa is fast emerging as a good employment opportunity for telecom and mining professionals. Malaysia and Dubai remain as the coveted destination for those in construction industry. Indian engineers and managers are absorbed in large numbers by UAE’s oil and gas sectors. The US, Singapore and Canada retain their favorite tag with IT, semiconductor, banking and finance professionals.

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In early 90s, when dollar ruled the roost, its possession meant ability to survive in the international stage. In June ’91, when Indian government sold the gold to the Bank of England and Union Bank of Switzerland, the country’s economy was at its lowest. India’s foreign reserve was barely $2 billion.

India’s economy has undergone dramatic change over these last two decades. From a weakling, it has developed into something respectable. The foreign reserve has now reached a healthy $285 billion.

Though economy is improving, even surpassing expectations, there is still much to accomplish in many areas. Inflation is speeding ahead like a runaway horse. The biggest challenge to economy now is to find a balance between GDP growth and inflation.

After displaying remission tendencies in October last, inflation is climbing steadily from November. Food price inflation is the worst at around 20% with prices of all the essential commodities going through the roof. With sugar price breaching the Rs.50 mark, it is high time action is taken to rein in the prices.

One of the options before government is to withdraw the stimulus packages, introduced to help the economy overcome recession. Another is to hike up interest rates. Both actions have a double-edged effect, as they might end up damaging the frail economy, which is recovering well from the global economic downturn. This has prompted the government to adopt a wait and watch approach, instead of taking hasty action.

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