India is set to become third largest economy of Asia next year as it is expected to record 9.2 per cent growth during the current financial year. It will overtake Japan within a year because of boom in services and manufacturing sectors. However, it is still a long way for India to catch up with China, which reported 10.7 per cent increase in the Gross Domestic Produce (GDP) in 2006. India already surpassed South Korea in economic growth.

The current fiscal growth has been made possible on account of 11.3 per cent growth in manufacturing. The Indian finance ministry said that doubledigit growth in the service sector has also contributed to the higher growth in economy. Hotel, transport and communication sectors recorded double digit growth. However, it is agriculture, which has witnessed only 2.7 per cent growth, six per cent lower than the previous year.

The government is also concerned at inflation, which hovers over 5.5 per cent for the past several months. It is estimated that India needs 320 billion dollar investment in the infrastructure sector. Moreover, the growth in the country has centered around eight metros, whereas there are over 700 cities in India. The infrastructure is considered as major constraint to growth, especially of the power sector.