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India's economic growth slows as new risks emerge with Pakistan

[MUMBAI] India's economy grew at the slowest pace in five quarters, with the outlook clouded by growing political tensions with Pakistan.

Gross domestic product rose 6.6 per cent in the three months to December from a year ago, the Statistics Ministry said in a statement in New Delhi Thursday. That compares with the median estimate of 6.7 per cent in a Bloomberg survey and a revised 7 per cent in July-September.

The government is projecting growth of 7 per cent in the financial year to March 31, modestly lower than the 7.2 per cent in a Bloomberg survey, but higher than last year's 6.7 per cent.

Waning consumer demand dampened momentum in an economy where domestic spending makes up about two-thirds of GDP. Slower global growth is also weighing on the economy

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India is facing new risks from political tensions with its neighbour Pakistan after tit-for-tat airstrikes. Borrowing costs have soared and some companies have deferred bond sales, straining access to funding

Concerns about weak growth prompted India's central bank to unexpectedly cut interest rates this month, with Governor Shaktikanta Das leaving the door open for further easing if inflation remains benign. The rate cut followed a US$13-billion consumer stimulus in Prime Minister Narendra Modi's final budget before elections to help stoke rural spending

Gross value added - a key input of GDP that strips out taxes - rose 6.3 per cent in October-December quarter from a year ago, against the estimate of 6.5 per cent.

Agriculture output expanded 2.7 per cent from a year ago and manufacturing grew 6.7 per cent.

BLOOMBERG