GDP falls sharply in first quarter

The Indian economy grew at the slowest pace in three and a half years in the April-June quarter, as a spiraling inflation coupled with rising interest rates sapped consumer demand and curbed corporate investments. GDP in the fiscal first quarter grew by 7.9% as against 8.8% in the fourth quarter of the last fiscal year, the Central Statistical Organisation (CSO) said. The Indian economy had expanded by an impressive 9.2% in the first quarter of the previous fiscal year. GDP growth in Asia's fourth-biggest economy fell below the 8% mark after nine quarters.

Growth in the manufacturing sector slumped to 5.6% from 10.9% in the same quarter last year. Agriculture growth too slid to 3% versus 4.4% in the year-ago period. The construction sector did relatively better, posting a strong growth of 11.4% compared to 7.7%. The mining sector grew by 4.8% in Q1 FY09 versus 1.7% in the year-ago period, while electricity expanded by 2.6% as against 7.9% in the first quarter last year. Trade, hotels, transport & communications grew at 11.2% (13.1%) and finance, insurance, real estate & business services rose by 9.3% (12.6%).