India’s growth rate expected to dip below 7%

India’s growth is forecast to have slowed in the three months ended in September, slipping below 7% for the first time in more than two years and adding pressure on the central bank to end its 18-month-long campaign to fight inflation.

The Reserve Bank of India has hiked interest rates 13 times since March 2010 to curb excess demand and stem inflation, which remains above 9%. But other factors, namely the crisis in Europe and slower growth in the U.S., are now also fueling investment uncertainty and curbing demand for Indian-made goods.

Most of the slowdown is expected to come from industrial production, where growth fell more than expected in September, led by lower manufacturing and electricity production, as well as mining, which has also been hit by land acquisition and weather-related issues.