Economic growth slows to 7.9%

MUMBAI: India's economic growth slowed to 7.9 percent in the April-June quarter, down from 9.2 percent in the same period last year, amid a slump in manufacturing, government figures showed Friday. The decline in the growth rate was widely anticipated and comes after months of monetary tightening, as authorities have tried to reign in surging inflation.

``These are numbers that shouldn't surprise,'' said Saumitra Chaudhury, a member of the Prime Minister's Economic Advisory Council and chief economist at the credit rating agency ICRA Ltd., a Moody's affiliate. ``When you have monetary tightening, you do get lower growth. That was expected,'' he said. ``But it's not terribly low; 7.9 percent is still high by historical standards.''

Manufacturing growth was hit hardest, slumping to 5.6 percent from 10.9 percent for the same period last year. Part of that fall can be attributed to last year's high growth, when manufacturing output was ``flying,'' Chaudhury said. Inflation, which has been raging at 13-year highs, appears to have stabilized since June, he added.

On Thursday, the government reported that the wholesale price index, the nation's most-watched inflation indicator, fell for the week ending Aug. 16 to 12.4 percent from 12.63 percent for the previous week. Chaudhury said he expects the central bank to maintain interest rates when it next meets in October, rather than further raising them.

The trick will be to continue to trim inflation without, he said, ``killing the goose that lays the golden egg.'' ``The goose is still alive, but it's a bit shopworn,'' he added.