India's GDP slowdown continues

India's economy continues to slowdown according to the latest government figures. For the April-to-June quarter, it grew at 4.4%, compared with the corresponding period of the previous year.

It was a weaker performance than most economists had been expecting and was a slowdown from the first three months of the year, when growth was 4.8%. The slowdown was due to contraction in mining and manufacturing activity. Friday's figures show the economy is now expanding at the slowest rate since 2009.

"We do not wish to sound alarmist, but concern on the economy can hardly be overstated," said Director General, Confederation of Indian Industry, Chandrajit Banerjee.

"The economy needs the undivided attention of policy makers," she said.

It adds to the pressure on Indian Prime Minister Manmohan Singh, who earlier addressed Parliament over the nation's economic problems. In his statement to parliament, made before the figures were released, the prime minister said India was not facing a repeat of the crisis in 1991.

Back then, India's foreign currency reserves became so depleted that it had to borrow from the International Monetary Fund to pay its import bills.

"Growth will pick up in the second half, barring extreme unforeseen eventualities," the prime minister said.

He also said that a strong monsoon would boost harvests and help reduce food inflation. Singh was also keen to reassure the nation over the falling value of the Indian rupee, saying it was "a matter of concern".

The rupee hit a record low against the dollar on Wednesday and has fallen more than 20% this year. That fall is damaging the economy, as India imports large amounts of fuel and foodstuffs and the weak rupee makes those imports more expensive. Singh said, "Clearly, we need to reduce our appetite for gold, economise on the use of petroleum products and increase our exports."

He also blamed the fall in the rupee on 'external' factors. The prime minister highlighted the impact of developments in the US, where the economy is improving and officials at the Central Bank have started to talk about cutting back on stimulus measures.

"In a more equitable world order, it is only appropriate that the developed countries - in pursuing their fiscal and monetary policies - should take into account the repercussions on the economy of emerging countries," he said.

The Indian government has raised the import duty on gold and increased deposit rates to stem the outflow of money.

BBC