Depressing. That's possibly the word that best describes GDP growth for the three quarter ended 31 December 2011 of 6.1 percent. The slowest pace of growth in almost three years, the figure was even below market estimates: a Reuters poll had predicted GDP growth of 6.4 percent, while a CNBC TV18 poll put it at 6.25 percent.
In the July-September quarter, GDP expanded by 6.9 percent. There's a strong chance now that full-year GDP growth (for the 12 months ending March 2012) could fall below the estimated 6.9 percent. The PM's Economic Advisory Council had projected a full-year GDP growth of 7.1 percent, but the Q3 numbers surely make that look a bit out of reach.
So, how did the various sectors perform in the past quarter?
Manufacturing, which accounts for about 15 percent of GDP, grew by a measly 0.4 percent, down from 7.8 percent in the same period a year ago. The sector continued to reel under the effect of high raw material costs and high borrowing costs. While weak manufacturing growth was expected, the flat near-zero growth surprised many economists.
Agriculture, which accounts for another 14 percent of GDP, didn't fare much better: farm output grew by 2.7 percent, from 11 percent a year ago.
The mining and quarrying sector was the worst performer: crippled by environmental issues and policy logjams, it shrank 3.1 percent after expanding by 6.1 percent in the same period a year ago.
In contrast, services continued to show robust growth. The trade, hotels, transport and communication sectors expanded by 9.2 percent from 9.8 percent a year ago, while growth in financing, real estate and business services moderated to 9 percent from 11.2 percent. Community, social and personal services also made a strong comeback with a 7.9 percent jump after last year's 0.8 percent decline.
Construction also stayed strong, growing by 7.2 percent against 8.7 percent a year ago.
On the demand side, surprisingly, consumer spending, represented by private final consumption, also seems to be holding up: it was up 6 percent from a year ago and a robust 11 percent from the previous quarter. Of course, the last quarter of the year contains the traditional festival season, so that could explain the spending jump during this period.
However, gross fixed capital formation, which represents the creation of productive assets by businesses, slumped by 1.2 percent from a year ago, although there was an 8 percent improvement from the previous quarter.
The fact that consumer spending is holding up (keeping demand high) while investments in capacity creation and expansion are slowing year-on-year is definitely cause for concern, because that combination is likely to increase inflationary pressures in the future.
While several economists are confident that the Reserve Bank of India (RBI) will cut policy rates in April to boost growth, it's doubtful how far central bank Governor D Subbarao can go in cutting rates aggressively.
Food prices threaten to rise again, as do fuel prices. In fact, a recent Macquarie report warns that India should brace itself for an 'oil shock', which could push up inflation again and prematurely stall the interest-rate easing cycle.
With the threat of high prices looming once again, the RBI's hands will be tied -- and attention will turn to what the government can do to help the economy emerge from the quagmire of slowing growth.
"If the government does not take any policy actions, the growth outlook could remain ominous," Samiran Chakraborty, head of regional research - India, Standard Chartered Bank, told CNBCTV18.
If the government fails to use this chance to introduce some meaningful policy measures in the Budget, there's a good chance that growth could slip below 6 percent.
And we might just have to get used to that.