MUMBAI: India’s economy grew at its slowest pace in more than six years in the July-September period, down to 4.5 per cent from 7 per cent a year ago, according to government figures released on Friday that piled more pressure on Prime Minister Narendra Modi.
The expansion in Asia’s third-largest economy fell from 5.0 per cent in April-June and marked the sixth consecutive quarterly contraction.
The GDP growth, now well below the level needed for India to provide the millions of jobs required each year for new entrants to the labour market, poses a major headache for Modi.
His government is struggling to kickstart what was once the world’s fastest growing major economy as consumer demand shrinks and unemployment surges to a four-decade high.
Finance Minister Nirmala Sitharaman has announced several reforms, easing restrictions on foreign investment in key sectors, slashing corporate taxes, and launching a privatisation drive aimed at reviving moribund state firms.
The central bank, the Reserve Bank of India (RBI), has cut interest rates five consecutive times this year in a bid to boost lending. But none of the measures have raised consumer confidence. Demand for everything from cars to cookies has plummeted.
The slump has already seen India lose its position as the fastest-growing major economy to China this year.
China said last month that its economy grew 6 per cent in July-September, down from 6.2 per cent in the second quarter.
Economists expect India’s central bank to announce yet another rate cut on Thursday to combat a liquidity crunch caused by the collapse of India’s shadow banking sector. Rates are currently at a nine-year low.
Modi’s right-wing government won a landslide re-election victory in May but its economic record has been patchy.
Experts say the economy has never recovered from a 2016 shock cancellation of bank notes that forced many small-scale businesses to shut down or the roll-out of a nationwide goods and services tax in 2017. — AFP
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