India growth falls to four-year low as rupee suffers worst month

INDIA’S prime minister sought to quell fears of a currency crisis yesterday as economic growth fell to a four-year low, while New Delhi raised prospects of joint intervention with other countries following the rupee’s crash to record lows. The Finance Ministry said that India was liaising with governments in other emerging-market countries to co-ordinate intervention in offshore currency markets.

It predicted action soon, but declined to share specific details of the discussions.

The move to target traders abroad came as the rupee suffered its worst month ever, dropping more than 8 per cent against the dollar in August as confidence drained out of India’s econ- omy.

Data yesterday showed that economic growth decelerated to 4.4 per cent in the April-June quarter, its slowest rate since the first three months of 2009.

Prime Minister Manmohan Singh said the currency’s fall was a matter of concern, but dismissed doomsayers’ predictions for the economy, insisting its fundamentals remained sound and its banking system was well capitalised above international requirements.

“We need to ensure the fundamentals of the economy remain strong so that India continues to grow at a healthy rate for many years to come,” he contin- ued.

“That we will ensure. We are no doubt faced with important challenges.”

India suffered decade-low growth of 5 per cent in the financial year ending in March, and many analysts surveyed this week expect this year to be worse.