India became the latest developing economy to hit the brakes yesterday after it recorded its slowest expansion in almost a decade, partly because of political paralysis that economists fear could lead to a bigger crisis.
The economy expanded at an annual rate of 5.3 per cent in the first quarter, from 9.2 per cent in the same period last year, as agriculture and manufacturing were hit by sharp slowdowns. The news comes as first-quarter US growth was revised down from 2.2 per cent to 1.9 per cent.
India’s slowing emerging economy joins those of China and Brazil, both of which have shown signs of a slowdown in recent months.
Pranab Mukherjee, India’s finance minister, blamed the weak data on the poor performance of the manufacturing sector, which shrank 0.3 per cent from a year earlier. He also promised to take “all necessary steps” to trim the country’s ballooning budget and current account deficits.
Govinda Rao, a member of the economic advisory council to the premier, said the latest data should be the final “wake-up call” for the government. – (The Financial Times Limited)
