NEW DELHI: India's economy accelerated slightly in the April-June quarter, growing by 5.5 per cent year-on-year and beating market forecasts, official data showed Friday.

The figure, which beat market expectations of 5.3 per cent expansion, offered some relief to the embattled government of Prime Minister Manmohan Singh, which has been reeling from a string of political scandals.

Manufacturing output rose by a scant 0.2 per cent in the quarter, the first of the 2012-13 fiscal year, and output from the construction sector climbed 10.9 per cent.

The headline growth figure, which was higher than the 5.3 per cent in the January-March quarter, was still far below the near double-digit levels India says it needs to provide jobs to its hundreds of millions of young people.

Global rating agencies like Fitch and Standard & Poor's have lowered their outlook on India's investment-grade rating amid rising worries about the government's deteriorating finances and negative current account.

The central Reserve Bank of India has warned that the country's economic prospects are unlikely to improve significantly in the near-term, due to elevated inflation and lack of economic reforms.

The bank has kept interest rates on hold since April – when it cut rates for the first time in three years by 50 basis points – and economists do not expect the bank to lower rates in a hurry while inflation remains near seven per cent.