India's economy grew by 7.6% in 2015-16, up from 7.2% the year before, as the country retained its place as the world's fastest-growing major economy.
Quarterly economic growth leapt to 7.9% in the three months to April from a revised 7.2% in the previous quarter, government data showed.
That acceleration was greater than analysts had predicted.
Finance Minister Arun Jaitley said with China slowing, the world was seeking "other shoulders to rest... growth on".
Speaking at the Future of Asia conference, he said that India, with planned infrastructure spending, could be a very powerful economic driver.
The sectors that registered growth of more than 7% during the year were; financial, real estate and professional services (10.3%), manufacturing (9.3%), trade, hotels, transport, communication and services related to broadcasting (9%), and mining and quarrying (7.4%).
Agriculture, forestry and fishing grew by 1.2% and construction by 3.9%. Electricity, gas, water supply and other utility services posted growth of 6.6%, as did the public administration, defence and other services sector.
Analysis: Sameer Hashmi, India business reporter
The big question is, can India sustain this growth momentum over the next decade? That's the key if Asia's third-largest economy is to achieve its true growth potential and reach the point where China is today.
Prime Minister Narendra Modi's government has introduced some key reforms in the last two years, including easing rules for foreign investments in sectors such as defence and railways, pushing for manufacturing and drawing up a national bankruptcy law. But what has really helped India is the fall in crude oil prices, given that the country is a net importer.
Despite these steps, the economy still faces some big hurdles that could derail its fast pace of growth. Poor infrastructure, high levels of bad corporate debt and low job creation are some of those challenges.
The last one is particularly a serious issue. India needs to create 10 million jobs every year to absorb its young population entering the workforce.
And all these problems will need concrete measures to be effective in the long run.
Craig Botham, emerging markets economist at Schroders, said he still had doubts about India's actual pace of growth.
"Industrial production, for example, was barely positive in the first quarter. In general, the rest of the economic data looks more consistent with a 6% growth rate than one approaching 8%," he said.
"Concerns over measurement aside, momentum does seem to be improving and combined with recent legislative gains, this should provide reassurance that the economy is headed in the right direction."
India's GDP estimate for the three months to June - the first quarter of 2016-17 - will be released on 31 August.