India's red hot economy is losing steam

India's cash crunch impacts healthcare
India's cash crunch impacts healthcare

India's crown is slipping: It can no longer claim to be the fastest growing major economy in the world.

The annual rate of growth slumped to 6.1% in the quarter ended March 31, down from 7% in the previous quarter.

That was much weaker than economists had forecast and means India has again fallen behind China, which recorded growth of 6.9% in the same quarter.

Indian government figures released Wednesday showed that growth for the 2016-17 fiscal year slowed to 7.1%, from 8% the year before.

Related: Women are missing out on India's economic boom

The weaker GDP numbers suggest Prime Minister Narendra Modi's decision to scrap 86% of India's paper currency late last year might have halted India's economic boom in its tracks.

In a bid to crack down on tax evaders, Modi abruptly banned all 500 and 1,000 rupee notes -- the two largest denominations at the time -- on Nov. 8.

The surprise move jolted the cash-dependent economy and brought several major sectors grinding to a halt.

The crisis took a small bite out of growth in the quarter through December. Now it looks like the impact of the cash ban may finally be showing up in official data.

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