Increase in global uncertainty, weak industrial growth, slow down in investment activity and deceleration in the resource flow to commercial sector led to dip in output growth. Inflation risks emanating from suppressed domestic energy prices, incomplete pass-through of rupee depreciation and slippage in fiscal deficit, further fuelled by food and commodity inflation have led to policy tightening.
Such a slowdown in growth is desirable because the alternative is higher inflation - indeed, continually rising inflation. Looking back, most recessions have resulted from attempts by the policy authorities - yes, the Fed - to reverse increases in inflation generated by overheating.