New Delhi, May 31: India's annual economic growth slumped in the January-March quarter to a nine-year low of 5.3 percent as the manufacturing sector contracted and a fall in the rupee to a record low suggests the economy remains under pressure in the current quarter.
The growth rate was much lower than expected and was even below the lowest forecast in a Reuters poll that had produced a median of 6.1 percent from predictions ranging between 5.5 percent and 7.3 percent.
"The data highlights the unusual degree of weakening of the country's economy, likely driven by poor investment and widening trade gap," said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong.
"The data also poses a dilemma for policymakers, as they have no fiscal room to stimulate growth, while monetary easing scope is very narrow, at least for now, due to rebounding and high inflation."
The growth rate in the final quarter of India's fiscal year was the lowest since 3.6 percent in the January-March quarter of 2003, Thomson Reuters data shows.
The data showed that the manufacturing sector shrank 0.3 percent in the quarter compared with a year earlier. The farm sector grew 1.7 percent.
Gross domestic product rose 6.5 percent in the fiscal year to the end of March 2012, the lowest growth rate since 4.0 percent in 2002/03 and a sharp slowdown from the previous year's 8.5 percent.
The impact of the euro zone debt crisis, a lack of economic reforms and high interest rates dragged on India's growth throughout last year.
Before Thursday's data, private economists had cut forecasts for Asia's third-largest economy to between 6 percent and 6.5 percent for the fiscal year to March 2013. The government forecasts close to 7.5 percent.
The yield on India's benchmark 10-year government bonds are down 11 basis points so far on Thursday.
The BSE Sensex extended its declines after the data to 1.3 percent on the day.
Anubhuti Sahay, an economist at Standard Chartered Bank in Mumbai said the data was "shocking".
"A rate cut is a given now," Sahay said.
The rupee fell on Thursday to a record low beyond 56.50 per dollar. Its slide of 14 percent from its 2012 high adds to inflation concerns in the country.
The rupee has fallen in the face of global risk aversion over the euro zone debt crisis. But investors have raised a number of India-specific red flags as well, including a swelling current account, high government spending on subsidies such as oil and a rash of unpredictable regulations and tax as the coalition struggles to push through economic reforms.
Hyderabad, Feb 10: All India Majlis-e-Ittehadul Muslimeen (AIMIM) chief Asaduddin Owaisi continued his tirade against PM Modi and Amit Shah against Citizenship Amendment Act (CAA), National Population Register (NPR) and National Register of Citizens (NRC). "We are ready to take bullets in our chests but we will not show our papers.
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