The Straits Times
Published on Nov 30, 2012

India growth stuck at 3-year low as reforms stall


MUMBAI (AP) - India's economic growth slid to 5.3 per cent in the September quarter, stuck at its lowest levels in three years as New Delhi struggles to enact reforms to kick start Asia's third-largest economy.

The number released on Friday by the government was in line with expectations that the third quarter was lackluster. A weakening economy complicates New Delhi's effort to create jobs for its exploding youth population and balance the budget, while paying for costly social programs in advance of national elections scheduled for 2014.

India is struggling with high inflation and high interest rates, coupled with a wide fiscal deficit, weak currency, and uncertain policy environment, which have hit both consumption and investment.

"The country is marred by the investment slowdown," said Madhavi Arora, an economist at Kotak Mahindra Bank. "The investment story has not improved in the last two and a half years. It is worsening each and every quarter." She said she expects growth for the fiscal year ending March to be 5.6 per cent. That would be the country's worst annual performance since 2003, according to FactSet.