|
India's Economic Growth Slumps To 5.4%: What It Means for Future Policy Changes
Growth slumped to 5.4% in the July-Sept quarter, leading RBI to revise its growth forecast for 2024-25 to 6.6%. There are calls for a rate cut to boost demand and growth. While rural demand remains strong, urban demand has slowed. Experts suggest persisting with reforms in light of global uncertainty and the upcoming budget may provide guidance.
India's economic growth slowed to 5.4% in the July-September quarter, a seven-quarter low, raising concerns and calls for action. This drops surprised analysts who had predicted over 7% growth and led the Reserve Bank of India (RBI) to lower its growth forecast for 2024-25 from 7.2% to 6.6%.
The slowdown prompted calls for the RBI to cut interest rates to stimulate demand. Finance and commerce ministry officials supported these calls, highlighting a difference in views on growth and inflation between the government and the central bank. A finance ministry report suggested the RBI's policies and other factors contributed to weaker demand.
While urban demand has decreased, rural demand remains strong, offering a positive sign for future growth. Recent data indicates some economic recovery and easing inflation, although food prices, especially for vegetables, remain high. These factors raise hopes for an interest rate cut in February. However, global monetary policies, particularly in the US, complicate this decision.
|
