The Indian economy is still one of the fastest-growing in the world
India's economy grew 5.8% in the first three months of the year compared with the same period last year, which was better than had been expected.
The official gross domestic product figure was down from 8.6% annual growth seen in the first quarter of 2008.
Although growth has slowed from last year, the economy is still expanding faster than most other countries.
It grew 6.7% in the full financial year, which was down from a rate of 9% in the year to the end of March 2008.
'Growth bottomed out'
"The GDP growth number justifies the claim that India is dealing with the global crisis from a position of strength," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.
"This means that growth has bottomed out, or at least the deceleration has stopped."
The figures are good news for the newly-elected Congress-led government, which has made reviving growth its top priority.
Among the sectors showing an improvement was farm output, which grew at an annualised rate of 2.7% in the first three months of 2009 having contracted 0.8% in the previous quarter.
Construction grew 6.8% in the period compared with 4.2% in the previous quarter.
But the manufacturing sector contracted an annual 1.4%, having grown 0.9% in the previous three months.