By Anant Vijay Kala

NEW DELHI--India's economic growth picked up speed last quarter, driven by stronger farm and construction output, but is expected to lose momentum in the coming months as a government crackdown on unaccounted wealth weighs on activity.

Asia's third-largest economy grew 7.3% in the three months ended Sept. 30, according to government data issued Wednesday. That is compared with a 7.1% expansion in the previous quarter, but missed economists' forecasts of a 7.5% increase.

While growth has been consistently above 7% in recent quarters, a government move in November to withdraw and replace about 86% of bank notes in circulation has left people and small businesses with little cash to spend, bringing economic activity to a near standstill.

Most economists warn that the sudden withdrawal of the high-denomination bank notes could shave-off as much as 1.5 percentage points from the economy's growth rate this year if the introduction of replacement bills takes too long.

Wednesday's data show farm output rose 3.3% from a year earlier, stronger than the 1.8% expansion in the preceding three months, thanks to normal levels of rainfall during the June to September crop season for the first time in three years.

Manufacturing output stayed healthy, rising 7.1% in the three months to Sept. 30, compared with an 9.1% rise in the three months to June.

Write to Anant Vijay Kala at anant.kala@wsj.com

(END) Dow Jones Newswires

November 30, 2016 07:24 ET (12:24 GMT)

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