A higher cost of borrowing resulting out of the several interest rate hikes by the Reserve Bank of India over the past few months led to a sharp fall in the growth rate of the manufacturing sector, which halved to 5.6 per cent as compared with the 10.9 per cent growth witnessed in the sector in the first quarter of last fiscal.
Agriculture too, which recorded a healthy growth rate of 4.4 per cent in the same period last year, grew by only 3 per cent. The other sectors, which witnessed considerable slowdown in growth, were electricity, gas and water supply, which grew at the rate of 2.6 per cent against the 7.9 per cent growth last year.
In the services sector, trade, hotels, transport and communication grew by 11.2 per cent, against 13.1 per cent, while financing, insurance, real estate and business services expanded by 9.3 per cent, against 12.6 per cent. Moody’s economic analysis arm, Moody’s Economy.com, in an official media release, pointed out that the tardy growth in services, which account for more than 50 per cent, was the major cause of the slowdown. “Growth in finance, insurance, real estate and business services slipped into double-digit territory, as global financial market turmoil has taken its toll on the Indian markets,” said the release. Pointing out that manufacturing growth was in line
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