New Delhi: The Indian economy grew at 7.2 per cent in the October-December quarter, government data showed on Wednesday, beating expectations by riding on higher government spending and a pickup in the manufacturing sector.

The data is also a booster shot for Prime Minister Narendra Modi, who faces mounting criticism over bad loans and a Rs 12,700 crore fraud at state-run Punjab National Bank, the biggest fraud in the country’s banking history.

The latest data shows that the economy in this quarter grew fastest in the fiscal year 2017-18, signaling a revival after emerging from the negative effects of the twin decisions of demonetization and Goods and Services Tax.

The GDP growth rate came in above expectation as a Reuters survey of 35 economists predicted the data to come at 6.9 per cent.

A 7.2 per cent growth rate also means that India has regained the status of the fastest growing economy as it topped China's 6.8 per cent pace for October-December. The last time India had a faster growth rate was in the final three months of 2016.

A strong gross domestic product reading could lift domestic shares, and boost the rupee, which has been Asia's second weakest currency this year, losing about 1.6 percent against the dollar.