The economy grew 6.1% during October-December 2011, the slowest pace of expansion in 11 quarters, due to a slowdown in the manufacturing sector and contraction in mining activity. Although the latest data has not prompted a reduction in the annual growth projection of 6.9%, it is expected to put further pressure on the Reserve Bank of India to cut interest rates as investment has declined. A part of the moderation from 8.3% GDP growth in the third quarter of the last financial year was on account of consumers deferring purchases due to high interest rates and elevated price levels. The crisis in Europe and the slowdown in the US also took a toll on exports, and impacted manufacturing activity in the country. In case of mining, the ban on iron ore mining in certain parts of the country and the impact of environmental clearances on coal took a toll. Even agriculture grew at a slower pace than a year ago but that was due to a high base in the third quarter of 2010-11. Data released by the Central Statistics Office showed that the farm sector expanded by 2.7% during October-December 2011 compared to 11% a year ago. Three of the four sectors clocked over 9% rise in activity, with construction too growing by over 7%.
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