Brace for more economic uncertainties as the government's troubleshooters struggle for options to turn around the economy buffeted by political compulsions, dipping investments and a sputtering world economy.
The growth — measured by GDP, or value of all services and goods produced in a specific period — crashed to a nine-year low of 6.5% in 2011-12, and by 5.3% during the January-March quarter, the worst in 36 quarters.
The national income data released on Thursday showed that the manufacturing sector contracted (-)0.3% during the quarter, confirming what most analysts had been fearing: Raising interest rates failed to tame price rise.
Slower industrial growth can result in fewer jobs and lower salary hikes as firms, squeezed in by lower sales, hold back on investments and hiring.Hit by galloping prices and the sliding rupee that slumped to a record low of 56.31 to the dollar, the finance ministry on Thursday announced a set of austerity measures, banning new posts, meetings in five-star hotels and purchase of new vehicles and restricting foreign travels by officials.
India's overall consumer price inflation - a more realistic cost-of-living index because it captures shop-end prices - rose 10.36% in April. The surging prices have prompted people to cut down on expenses on non-essential items.
Economists, however, warned that things might turn worse if immediate steps were not taken.
"We may be in the danger of slipping in to a 1991-like crisis," said Rajiv Kumar, Secretary General of industry body Federation of Indian Chambers of Commerce and Industry (Ficci).