NEW DELHI - India's economic growth slowed to a worse-than-expected 6.1 percent in the final three months of 2011, data showed Wednesday, hit by a string of interest rate hikes and a sluggish global economy.
The figure for the financial third quarter was below market expectations of 6.3 percent expansion and comes on the back of 13 rate rises since March 2010 that have sapped demand and slowed manufacturing activity.
"India's economy was battered from all angles through the second half of 2011 - from rising interest rates, falling stock prices, a plunging rupee and weaker global demand," said Moody's Analytics economist Glenn Levine before the data came out.
Manufacturing output in the three months to December grew just 0.4 percent, from 7.8-percent growth in the same period a year ago.
The latest data highlighting a faltering local economy comes as more bad news for the Congress-led government, already buffeted by a string of corruption scandals and accusations of policy paralysis.
The government, hamstrung by debt, lacks the fiscal firepower to stimulate the economy, making it less able to weather another downturn after the financial crisis of 2008-09.
But some analysts believe the economic downturn could have bottomed-out and growth may pick up again in the January-March quarter.
Finance Minister Pranab Mukherjee, who is to present the national budget in March, said this week that the "worst state" of the economic slowdown was over and that "it is possible for us to overcome the crisis."
Even though 6.1 percent growth would be the envy of much of the world, it is a disappointing result for India, which is aiming for double-digit expansion.
Government experts have traditionally pin-pointed at least nine to 10 percent growth as the minimum level to substantially reduce the crushing poverty afflicting hundreds of millions of Indians.
For the full financial year to March, India will probably grow by 6.9 percent - far below an initial budget projection of nine percent - and down from last year's 8.4 percent expansion, the government said earlier this month.
Private economists have forecast growth of as low as six percent for the current year.