The GDP figure was way below 7.8% achieved in Q4 FY 2011. The dramatic fall in the GDP growth has now confirmed fears of a sharp slowdown in the Indian economy, which has been grappling deficits, inflation, falling rupee and global worries.
For the entire year 2011-2012 the GDP figure has come in at 6.5%, which is way below 8.4% reported in 2010-2011. Farm sector growth and manufacturing sector growth dropped sharply, which resulted in an overall fall in the GDP.
Analysts at foreign investors had warned and downgraded growth rates only recently. Goldman Sachs had said it was cutting its gross domestic product forecast to 6.6 percent from 7.2 percent for the fiscal year ending in March 2013.
On a financial-year basis, Morgan Stanley had reduced its GDP growth estimates to 6.3 per cent and 6.9 per cent in 2012-13 and 2013-14, respectively, from its earlier estimates of 7 per cent and 7.5 per cent.
Merrill Lynch had also downgraded India's GDP to 6.5 per cent from 6.8 per cent previously for fiscal 2012-13.