India's economy suffers sharp slowdown

Official data has revealed India's slowest economic growth in nearly six years. The 5.3 percent expansion in the three months to December is down from 8.9 percent a year earlierIndia's economy grew at its slowest pace in nearly six years in the third quarter as the Asian giant started to feel the full brunt of the deepening global downturn, official data showed Friday. The worse-than-expected 5.3 percent expansion in the three months to December, down from 8.9 percent a year earlier, spurred expectations the central bank will cut interest rate further to boost the flagging economy. India's government has long said it needs double-digit growth if it is to drag hundreds of millions of its people out of grinding poverty. The latest data provided grim reading for the Congress-led government, which must face general elections by May, and has been eager to spur the economy ahead of the polls. "The massive slowdown in growth... has now dismissed speculation India is more resilient in this global turmoil because its economy is more domestically oriented, said Sherman Chan, an economist at Moody's Economy.com. Growth in Asia's third-largest economy was sharply lower than the 7.6 percent expansion recorded in the second quarter and came in below analysts' forecasts of 6.1 percent. Agricultural production, which accounts for nearly 20 percent of gross domestic product and provides a living for two-thirds of Indians, contracted by 2.2 percent compared with 6.9 percent growth in the year-ago period. Manufacturing activity shrank by 0.2 percent, down from growth of 8.6 percent a year earlier amid flagging domestic and export demand. Construction growth slowed to 6.7 percent, from 9.0 percent a year earlier. The government has predicted the economy, which grew by nine percent last year, will expand 7.1 percent this financial year to March, but economists said the latest data meant that it would miss the target.  "It's not going to pan out, it's going to be more like 6.5 percent (growth)," said D.K. Joshi, principal economist at Crisil ratings agency.