India's economic growth hits two year high

A worker in an Indian factory

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India's economy grew by 5.7% in the three months to June, its fastest pace in two-and-a-half years, according to an official estimate.

The economy was helped by strong growth in electricity, gas and water supply, and financial services, the Ministry of Statistics said.

The growth figure was higher than analysts had been expecting.

India's new government has launched policies designed to encourage business investment, including changes to tax.

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Analysis: Sameer Hashmi, India Business Report

Ever since the Narendra Modi government took charge, business sentiment has improved on the ground. Investors have started pumping in money again, capital markets have been roaring, consumer demand has revived & hiring has picked up.

But this euphoria is primarily driven by sentiment and more steps would be required to sustain this optimism.

The performance of the Modi government as it approaches a hundred days in office - has been a mixed one.

While it has initiated measures to minimize tax litigation and opened up defence manufacturing along with railway infrastructure to attract foreign investors, it is still to announce big bang reforms that would give a major boost to the economy.

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