The first official estimate of economic growth in 2007-08 does not come as a surprise. At 8.7%, growth will be the slowest in three years.
Should we be worried?
There is no reason to, right now. It was widely known that a slowdown was very gradually creeping up on the Indian economy. The new data shows that while there is a clear deceleration in consumer demand, spending on investments is still strong. That will give the economy resilience.
But if the slowdown in the industrial sector persists and the US slips into recession in the months ahead, it is very likely that 2008-09 will see a further drop in the growth rate, somewhere close to 8% perhaps. That means that the Indian economy is retreating from the 10% growth mark, rather than marching towards it.
But the basic strength of the economy persists. And India is far better placed to battle global turbulence than it was in the mid-1990s. So, recovery will be faster.