NEW DELHI -- India's economy grew at a slower pace of 6.6% annually in the October-December quarter, a development which may leave Prime Minister Narendra Modi's government concerned ahead of general elections due by May.
The official data on gross domestic product estimates released on Thursday showed that growth softened in the third quarter of the current financial year as compared to 7% registered in July-September and 8% in April-June. The October-December growth rate was the slowest in five quarters.
Still, the GDP growth for the third quarter outpaced neighboring China's 6.4% growth in the same period, with India retaining the status of the world’s fastest growing major economy.
A statement issued by the Ministry of Statistics & Programme Implementation said the full year growth rate is estimated at 7%, compared to 7.2% in the last financial year.
According to analysts, the current trend shows the GDP growth rate could further slow to 6.3% in the fourth quarter of the current fiscal year ending in March.
Before the latest estimates were released, a Reuters poll forecast 6.9% growth for October-December period, while a research report by the State Bank of India, the country's largest public-sector lender, said it expected an expansion of around 6.7%.
The slowdown was blamed on factors such as weaker consumption and liquidity constraints which the so-called shadow banking sector continued to face.
The trend -- if it remains through March when the fiscal year ends -- could hamper Modi's efforts to convince voters that his economic policies worked well for the country.
Modi's government, which will seek a second five-year term in general elections, has been under fire from opponents for not doing enough to create jobs. India has a population of over 1.25 billion, and more than 12 million people enter the job market every year.
Falling prices of agriculture products, which left the farm sector in distress, also added to the government's woes.
It launched this month a scheme to support farmers' income, which along with recent goods and services tax rate cuts could put pressure on the economy's performance.
In its report, the SBI said it expected the total GST collection for February to be at 955 billion rupees ($13.4 billion), which is "significantly lower" than the previous month's total of 1.05 trillion rupees.