GDP growth: There may be more bad news yet

The Indian economy grew by just 6.9 per cent in the second quarter, that is, from July to September 2011. This decline in GDP growth was to be expected, given the slowdown in investment activity, especially in new investment projects, over the last two quarters. The big worry, however, is that this is only the first sharp visible decline being witnessed. The next quarter may be worse and the economy could see a 6 to 6.5 per cent growth for the full current fiscal year as a whole. Exports have contributed to GDP growth significantly, and if these were to flounder with the world economy doing badly, then that could pull down GDP growth even more sharply.

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