NEW DELHI: India’s economy expanded at its fastest pace in more than two years in the April-June quarter, revitalised by a decisive political mandate for the Narendra Modi-led BJP and subsequent actions by his government, suggesting that growth may be turning around at long last.Investment activity has gathered pace and reassured consumers have begun to spend again, indicating the worst slowdown in the last decade may finally be over.India’s GDP grew at 5.7% in the first quarter of 2014-15, exceeding expectations. This was the fastest pace since the fourth quarter of FY12, while being dramatically up from the 4.6% rise recorded in the preceding quarter, data released by the central statistics office showed on Friday.The GDP growth number, higher than the consensus estimate of around 5.4%, will embellish the Modi government’s 100-day report card, as economic recovery was high up on his agenda.“I think we have crossed the difficult situation that the country was facing,” the prime minister told reporters in Tokyo. “Within the first 100 days of this government, we have achieved stability and stopped the continued reversals that the country was facing. We have to move ahead now on the runway; I am confident that, very soon, we will attain even greater heights.” The Modi government was sworn in on May 26.The finance ministry expects the pace of growth to hasten even further. “With improvement witnessed in some important sectors including manufacturing as well as in the performance of exports (that registered a growth of 11.5% at 2004-05 prices), along with the measures taken by the government, the economy can be expected to show further improvement in the remaining part of the year,” the ministry said in a statement.Some experts expect the economy to post robust growth in the current fiscal year. “Growth has bottomed out and there is every possibility of the economy expanding closer to 5.7% for the full fiscal,” said Soumya Kanti Ghosh, chief economic advisor, State Bank of India.The government’s economic survey projected 2014-15 growth at 5.4-5.9%. Finance secretary Arvind Mayaram expects the economy to expand 5.8% during the fiscal.The economy grew 4.5% in FY13 and 4.7% in FY14, the first time in more than 25 years that it recorded two successive years of sub 5% growth.Madan Sabnavis, chief economist, CARE Ratings, however, said that too much shouldn’t be read into the numbers. “It was a low base of last year and high government spending that pushed growth to 5.7%. Growth in the coming quarters will be sustainable to the extent of staying over 5%, but it will not get support from the government due to high fiscal deficit,” he said, adding that the poor monsoon will drag down agriculture.Investments seem to have rebounded with gross fixed capital formation registering a 7% growth in the first quarter, against a 2.8% contraction in the same quarter last year. This is the highest growth in two years.Improved sentiment, the renewed policy thrust and a pickup in consumer demand look set to drive investment.“We expect incremental momentum in investments to quicken over the next few quarters owing to a combination of factors like higher traction in implementation of stalled projects and easing of supply constraint,” said Shubhada Rao, chief economist, YES Bank.Policy measures such as easing labour regulations, promoting single-window clearances among others with an emphasis on ‘ease of doing business’ will promote investments, Rao said.The manufacturing sector expanded after a gap of two quarters, recording 3.5% growth. Manufacturing, which had contracted for the first time since 1991-92 last year when it declined by 0.7%, has been a key focus area for the new government that sees its revival as being crucial to generating more jobs.As part of efforts to promote manufacturing, Modi has opened railway infrastructure to 100% foreign direct investment (FDI) and raised the overseas funding cap in defence to 49% from 26%. The government has also announced the setting up of eight electronics manufacturing hubs andseven electronics manufacturing clusters across the country.Among other measures taken by the government, finance minister Arun Jaitley has corrected the inverted duty structure for a list of items in the budget to promote domestic manufacturing of the final goods.Industry as a whole, which includes mining, construction and manufacturing, grew by 4.2%, against a 0.4% decline in the first quarter of the last fiscal. The agriculture sector, which contributes about 14% to overall GDP, put up a reasonable show despite deficient rainfall, growing by 3.8% against 4% in the year earlier.Services, the largest contributor to the GDP basket, disappointed with 6.8% growth, against 7.2% in the year earlier. Financing, insurance, real estate and business services together posted 10.4% growth, against 12.9% growth in the same quarter last year. Demand, as indicated by private final consumption expenditure, rose 5.6%, the same as in the year-earlier period. Consumer demand has been struggling over the past year on account of high inflation, leaving people with less disposable income.That’s likely to change, Ghosh said. “Consumption-led revival will happen quicker than what we had anticipated.” Though mining grew by 2.1% against a 3.9% decline in the year earlier, the upside risks remain on account of the recent Supreme Court ruling declaring all 218 coal blocks allocated by the Centre since 1993 as being illegal. Hearings on this resume on Monday.“In order to convert the first signs of revival into a full-fledged recovery, it is necessary that the government continues on its path of implementing the reforms agenda which would restart the investment cycle and revive demand in the economy,” the Confederation of Indian Industry said in a statement.Still, government may have to cut spending if revenues do not pick up, which will drag down community, social and personal services, which expanded 9.1%.