New Delhi - The Indian economy grew 9 per cent in the past fiscal year, helped by an improved performance in the agriculture sector, but at the same time, inflation breached the 8-per-cent mark, officials said Friday.

India's economic growth for the year that ended March 31 was below the previous fiscal year's 9.6 per cent, but beat the government's February estimate of 8.7 per cent.

"The upward revision in the gross domestic product (GDP) rate is mainly on account of the revision made in the estimated production of agriculture crops by the Department of Agriculture," the government said in a statement.

Agricultural production grew 4.5 per cent, above estimates of 2.6 per cent and the highest growth seen in the sector since 2002. It helped propel GDP growth to 9 per cent or above for the third-straight year.

On the other hand, the performance of the manufacturing sector deteriorated, growing 8.8 per cent, down from 9.4 per cent from the year before.

Meanwhile, data released by Finance Minister P Chidambaram showed that India's inflation rate surged to a three-and-a-half-year high of 8.1 per cent.

The increase in wholesale prices was recorded for the week ending May 17 from the same period a year earlier. It was higher than the 7.82 per cent for the week that ended May 10.

The wholesale price index is usually published weekly and is more closely watched than the consumer price index, which is published monthly and covers fewer products.

Chidambaram admitted that rising inflation was a cause of worry for the government.

"There is no sign of a decline in inflation rates," he said. "One of the reasons is relentless price rises of crude oil."

But the minister said the government would take further measures to tame inflation. "It is worrisome, but we are confident of gaining mastery over inflation," he said.

The inflation rate has continued to steadily climb over the past few months, much to the concern of the ruling United Progressive Alliance (UPA).

India is to hold a general election next year, and opposition parties have lashed out at the UPA for failing to curb rising prices. (dpa)