India's economy grew at an annual rate of 8.6% in the three months to March, largely due to growth in manufacturing. Growth was 6.5% in the previous quarter.
Analysts say the figures from the Central Statistical Organisation are likely to keep the Reserve Bank of India on its path of gradual rate increases.
The RBI raised interest rates in March and again in April. Lending by the central bank to commercial banks is 5.25% compared to 5% previously.
The economy for the year ending March 2010 grew by 7.4%, ahead of the RBI's January forecast of 7.2%.
Finance Minister Pranab Mukherjee said he expects the economy to grow by 8.5% in the financial year to March 2011.