(CNN) -- To the litany of challenges that confront India's path to a better life, we can now add subdued economic growth as a result of the global financial crisis.



A banana vendor stands on a flooded street as he waits for customers in Amritsar, India, on August 13.



After three spectacular years of 9 percent-plus annual growth, India will reach just 6.3 percent next year, according to the latest forecast by the International Monetary Fund in early November. The Reserve Bank of India is forecasting a more optimistic 7.5 to 8 percent.



While 7.5 percent may still sound a good result, it is barely enough for the economy to keep pace with the 10 million-plus young people who will join the Indian job market in 2009.



India's major shortcomings in infrastructure, education, health care and environmental protection are well known, as are the constant problems of corruption, poor governance, rural poverty, communalism, domestic terrorism, child labor, discrimination against women and natural disasters such as floods and earthquakes.



But at least in recent years India could point to a strong economy as the platform on which it was making its push for higher living standards, social modernization and economic reform. Since May 2004, when Prime Minister Manmohan Singh and Finance Minister P. Chidambaram took on the reins of government, India's economy has had a charmed run.



Strong growth in business sectors such asinformation technology, pharmaceuticals, automotive, financial services and retail have coincided with a better performing agricultural sector, and a housing and consumption boom driven by easier credit.



India's young working men and women -- more than half the country's 1.15 billion people are aged 25 or less -- have shown a much greater propensity to spend, compared to their thrifty, risk-averse parents and grandparents.



This willingness to go into debt rather than save has seen a massive rise in sales of consumer goods such as mobile phones, flat screen TVs, refrigerators, household utensils, motorcycles and cars. The same goes for spending on services, from tourism to healthcare to self-improvement.



Now the halcyon days appear to be over, as the international credit crunch flattens demand everywhere. Already the downturn is seeing job losses in sectors such as aviation, financial services, retailing and export industries, as companies tighten their belts and put expansion plans on hold.



The government admits things will get tougher, with Singh telling the nation on October 20 that "we must be prepared for a temporary slowdown in the Indian economy."



Earlier that day, the Reserve Bank of India cut its key repurchase (short-term lending) rate by 100 basis points to 8 percent, saying it needed to ease the pressure on India's credit markets and maintain financial stability. It followed that with another cut to 7.5 percent on November 1.



RBI Governor Dr. D. Subbarao noted the global downturn could be deeper and the recovery might take longer than earlier expected. "Consequently, the adverse implications through trade and financial channels for emerging economies, including India, have amplified," he said.



Economists and analysts have welcomed the central bank's moves, which have included a 350-basis point reduction in the cash reserve ratio -- the amount of money Indian banks must keep on hand -- between July and November.



Tushar Poddar, head of Asian economic research at investment bank Goldman Sachs, said the RBI's October 20 action was "well ahead of market expectations" and showed a bias towards growth and financial stability, against inflation.



Goldman Sachs had earlier cut its growth outlook for the 2009-10FY to 7 percent and has warned the figure could go lower if the international financial turmoil continues over the next few months.



But Poddar believes that India's export drive -- which has seen exports triple since 2003 to about $163 billion in 2007-08FY -- may not suffer too greatly.



In a recent study, he found that about two-thirds of India's exports go outside the United States and the European Union (the two trade areas most affected by the downturn) to China, Southeast Asia, West Asia and Africa. While Indian
What are the young population willing to do? What do economists predict will slow in 2009?
go into debt rather than save annual growth,
question: What are the young population willing to do?, answer: go into debt rather than save | question: What do economists predict will slow in 2009?, answer: annual growth,