For the 2016- 17, fiscal year ending in March, the government reported GDP growth of 7.1 per cent, in line with official estimates. The economy grew a revised 8 per cent in 2015-16.

Some analysts saw in the Q4 slowdown a lingering effect of the notes ban imposed by Prime Minister Narendra Modi in November last year to battle corruption and black money. "The lower-than-anticipated fourth quarter GDP number reflects the lingering impact of demonetisation...However, incremental data in April shows that growth impulse is improving and economic activity is picking up on the ground," said Shubhada Rao, chief economist at Yes Bank.

"This data is closer to the ground reality than the previous ones," said Anjali Verma, an economist at PhillipCapital in Mumbai. The 6.1 per cent figure is the lowest since the December quarter in 2014, which registered 6.0 per cent growth, Reuters data shows.

GVA or gross value added rose 5.6 per cent in January-March, slower than the previous quarter's 6.7 per cent. GVA strips out the impact of taxes and subsidies out of economic output and gives a better picture of economic activity. "Slowdown on GVA basis is disappointing, suggests spillover slowdown from the December quarter's note ban, when growth had proved to be surprisingly resilient," said Radhika Rao, group economist at DBS.

The weak GDP data will be a setback for PM Modi, who completed three years in office last week.

Losing the fastest growing economy tag will also a damper as the government gets ready to implement the mega reform goods and services tax (GST) on July 1.

The figure came as a shock as recent surveys have indicated signs of recovery in manufacturing and services sectors.

Wednesday's data showed that construction activity contracted 3.7 per cent year-on-year in the March quarter compared with a 3.4 per cent growth in the prior quarter. Manufacturing grew 5.3 per cent in the last quarter from a year ago, slower than an annual rise of 8.2 per cent in the December quarter.

Annual growth in trade, hotels and transport services slowed to 6.5 per cent in the January-March period from 8.3 per cent a quarter ago.