India’s Economic Expansion Slows in Second Quarter

MUMBAI — India’s growth rate continued to slide in the second quarter of the year, falling to 7.7 percent, the government reported Tuesday.

The report, which was broadly in line with analysts’ expectations, is likely to put further pressure on Indian policy makers to bolster the economy, which has been slowing since early last year, when it hit an annual pace of 9.4 percent.

Indian leaders have said they would like to push the economy to double-digit growth rates in the coming years. But analysts say that goal looks increasingly out of reach because policy makers have not done enough to improve the productivity of the economy in recent years and because industrialized countries, which are big investors in India, are starting to weaken again.

A slowing economy could also help fuel protests of the kind that paralyzed the government this month.

The social activist Anna Hazare ended a hunger strike Sunday after nearly two weeks, when the Indian Parliament agreed to consider his demand for the creation of a new anti-corruption agency.

Slowing growth in mining, manufacturing and construction accounted for most of the slowdown in the three-month period that ended in June. India’s gross domestic product grew at an annual pace of 8.8 percent in the same period a year ago; it grew 7.8 percent in the first three months of this year.

Many independent analysts are now forecasting that the economy will expand 7.5 percent or less in the current fiscal year, which ends in March 2012. That would be a notable decline from the 8.5 percent growth of the previous year. The government has set a target for 8 percent.

The Confederation of Indian Industry, an advocacy group based in New Delhi, said that to bolster growth, the government would have to overhaul the country’s complicated tax system, ease restrictions on manufacturing and allow greater foreign investment in protected industries like retail and insurance.

“Of particular concern is the slowdown in the manufacturing sector,” Chandrajit Banerjee, director general of the Confederation, said in a statement. “It is extremely important that we are able to push for reforms to enable manufacturing sector investment to move ahead.”

The slower growth should, however, help the country in its fight against inflation, which has been hovering around 10 percent for many months.

The Reserve Bank of India has raised its benchmark interest rates 11 times in less than two years in an effort to bring prices under control. It is expected to raise rates again next month, but corporate executives and analysts say it may now have to consider pausing.

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