New Delhi - Indian economic growth slipped to 7.9 per cent in the first quarter of the current fiscal year, its slowest pace in over three years as rising borrowing costs affected manufacturing and other sectors, news reports said Friday.

India's gross domestic product (GDP) was 7.9 per cent in the three months to June 30, compared to 9.2 per cent over the corresponding quarter of the previous year, data released by the government's Central Statistical Organization showed.

The moderation in GDP growth was in line with expectations of the economists as the federal Reserve Bank of India had hardened interest rates to control double-digit inflation, the PTI news agency reported.

Inflation in India has been recorded at a 13-year-high of 12.40 per cent due to rising food and oil prices.

The Business Standard online daily reported that the GDP in Asia's third largest economy had grown 8.8 per cent in the previous quarter and recorded an average growth of 8 per cent over the last three years.

Growth in the manufacturing sector nearly halved to 5.6 per cent from 10.9 per cent as rising interest rates impacted their expansion. The agricultural sector grew by 3 per cent, compared to 4.4 per cent in the same quarter last year.

The other sectors which saw declines in growth are electricity, gas and water supply which expanded at the rate of 2.6 per cent as against 7.9 per cent.

If the first quarter GDP growth continued in the remaining months of the financial year, the economy would expand at the rate projected by Indian Finance Minister P Chidambaram, the PTI report said.

The minister had projected the economy to grow close to 8 per cent, compared to 9 per cent in the previous financial year. (dpa)