India's economic growth slows, GDP drops to 7.9 pc in Q1

However, moderation in the GDP growth was expected as RBI hardened interest rates to control double-digit inflation.

If the first quarter GDP growth continues in the remaining months of this fiscal, the economy would expand at the rate more or less projected by Finance Minister P Chidambaram.

As he projected the economy to grow by close to 8 per cent, compared to 9 per cent in the previous fiscal.

Manufacturing growth almost halved to 5.6 per cent, against 10.9 per cent as rising interest rates impacted their expansion. Even though agriculture grew by lower rate of three per cent, it is quite considerable on the high base of 4.4 per cent.

The other sectors which witnessed considerable decline in growth rate are electricity, gas and water supply, which expanded at the rate of 2.6 per cent against 7.9 per cent.

While, financing, insurance, real estate and business services expanded by 9.3 per cent, against 12.6 per cent.

However, community, social and personal services grew by higher rate of 8.4 per cent, against 5.2 per cent.

Construction activities also expanded at higher rate of 11.4 per cent, as compared to 7.7 per cent, while mining and quaring grew by 4.8 per cent, against 1.7 per cent.

In absolute terms, India's GDP stood at Rs 7,82,357 crore in the first quarter of this fiscal, against 7,24,949 crore in the corresponding period of 2007-08.