The growth was only marginally lower than the 8.1 percent clocked in the first quarter of the year to March 2006. But it was way above the 6.7 percent logged during the same quarter a year ago.

The government has forecast that the economy will expand by 7.0-7.5 percent during this fiscal year.

The performance came despite a dip in farm sector output.

The agriculture sector accounts for nearly a quarter of India's gross domestic product and employs 70 percent of the workforce in the country of more than one billion people.

The farm sector grew by two percent during the second quarter, while the manufacturing sector expanded by 9.6 percent.

The buoyant economy has put more money in the pockets of consumers who have been buying everything from cars to refrigerators, increasing domestic corporate revenues.

Prime Minister Manmohan Singh said Tuesday the economy was expected to expand by 7.5 percent during the financial year and could attain 10 percent growth in three years if it made a "quantum leap" in agriculture, infrastructure and savings rates.