Economists were expecting a 0.4% increase, with some forecasting India’s worst slowdown in a decade.
Palaniappan Chidambaram, who recently took charge of India’s finance ministry amid the economic slowdown, has pledged to take steps to revive confidence in the Indian economy by clarifying tax laws and boosting investment.
“Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution and an independent judiciary will provide great assurance to investors.”
Indian government in one of its latest budget proposals had asked for allowing retrospective taxation, a move that received major criticism. The law would discourage investors to invest in the country.
Mr. Chidamabaram said the government would undertake policy easing measure in an attempt to bring the borrowing costs down for businesses and consumers.
India, Asia’s third largest economy, expanded at its slowest growth rate of 5.3% since 2003.
The Reserve Bank of India (RBI) has kept the key interest rate unchanged at 8%, citing rising consumer prices as the main reason behind the decision.
India’s growth forecast for the current financial year is lowered to 6.5% from 7.5%.