Dr. Kaushik Basu, Chief Economic Advisor, Government of India has said that the slowdown in the Indian economy was caused by the crisis in the eurozone and some missteps by the government.

While delivering the commemorative lecture at the Export-Import Bank of India, he said that the policy to address the slowdown and fiscal deficit has to be changed. He also warned that the impact of a break in the euroze would be significant and India is not insulated from it.

He warned that the effect of a stimulus might not be upto the desired level because the ability of the economy to react to stimulus has faded away. He recommends pushing up growth and believes that the the Reserve Bank of India should cut policy rates to support growth. He also recommends taking advantage of the low value of the rupee to boost exports to other countries.

India’s GDP growth has fallen to its lowest level in 9 years to 5.3 per cent for the fourth quarter of the financial year till March 2012. The GDP growth for the same quarter of 2010-11 was 9.2 per cent, showed the latest data announced by the company.

Meanwhile, union Finance minister Pranab Mukherjee has said that the government is aiming to control the fiscal deficit to 2 per cent of the national GDP.