India’s Gross domestic product (GDP) growth hit a three-year low of 5.3 percent on a year-on–year basis in the July-September quarter, according to the official data released Friday.

A GDP growth at 5.3 percent, depicting a 0.2 percent decrease from 5.5 percent recorded in the quarter ending June 30, indicates continuation of the economic slowdown in the country.

The manufacturing sector growth declined for the second consecutive period to 0.8 percent compared to the 2.9 percent growth recorded in the same quarter a year ago while the service sector grew at 7.2 percent against 8.8 percent in the previous year.

The Finance Ministry said that the lower-than-expected growth rate was disappointing and underscored the imperative need to push forward the politically challenging decisions.

“The growth rate for the first-half of the current financial year works out to 5.4 percent as against 7.3 percent in the first-half of 2011-12. Overall, the growth rate is below our expectations,” the Finance Ministry said in a statement.

Commenting on the growth rate, the government said the target was to achieve 5.8 percent growth for the full year. The Reserve Bank of India (RBI) also echoed similar views and sharply lowered the economic growth projection to 5.8 percent, from 6.5 percent projected earlier.

“I still believe the overall growth rate for the year is between 5.8 per cent and 6 per cent,” Dr C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, told NDTV.

The Manmohan Singh-led UPA government had initiated big-ticket reforms two months ago to boost investor sentiment and increase foreign fund inflow into the economy.

Economists believe that although the government initiative has improved investor sentiment, implementation of the executive decisions such as allowing FDI in retail, challenged by opposition parties, will take time and results may become apparent in the next fiscal only.

"Even with the uptick in business sentiment over the restarted reform initiative, the real economy will take some time to improve. Investment will continue to lag," Jyoti Narasimhan, senior principal economist with market intelligence firm IHS Global Insight, told Reuters.

Slowing exports due to weak overseas demand and high inflation are other areas of concern for the economy.