INDIA'S economy grew 7.9 percent in the July-September period, the fastest pace in six quarters, bolstered by government stimulus measures and rising industrial production, figures showed yesterday.

The upsurge suggests that Asia's third-largest economy could be emerging faster from the global slowdown than many expected, despite agriculture being hit by drought. The upswing is likely to encourage the central bank to proceed with gradual monetary tightening.

Economists had expected the economy to grow 6.3 percent from a year earlier after growth of 6.1 percent in the April-June quarter. The benchmark Sensex index was up 1.6 percent in mid-afternoon trade, to 16,901.8.

During the July-September quarter last year growth was 7.7 percent. Growth for the fiscal year ending March 31 skidded to 6.7 percent, its worst since 2003.

From 2003-08, India's economic growth averaged 8.8 percent a year.

Strong industrial production, rising private consumption and government stimulus drove growth during the September quarter, data from the government's Central Statistical Organization showed.

Mining and quarrying activities expanded 9.5 percent for the quarter from the same period a year earlier.

Manufacturing was up 9.2 percent.

Private consumption increased by 5.6 percent from the year-ago quarter in constant currency terms, and government spending rose 26.9 percent in constant currency.