Indian economy loses steam

The Indian economy lost further momentum in the October-December quarter as the global economic slump hit almost all segments of the economy, data released by the government showed. With the third-quarter GDP numbers coming in below expectations, the official full-year estimates are most likely to be scaled down. Also, the Reserve Bank of India (RBI) will come under more pressure to cut interest rates. The GDP grew by 5.3% in the quarter ended December 31, 2008 as against expectations of a 6% expansion. The Indian economy had grown by a much healthier 7.6% in the second quarter while it registered a solid 8.9% growth in the third quarter of the previous financial year.



GDP growth in the April-December 2008-09 period stood at 6.9% versus 9% in the corresponding period of last year, the CSO data showed. The GDP expanded at 7.6% in the first half of the current fiscal year. The Government and the RBI expect the Indian economy to grow by 7.1% in the year ending on March 31. However, given the strong headwinds confronting the Indian economy right now, that outlook now looks very much in danger of being reduced.