The rate of economic growth in India has fallen to 5.3% in the third quarter, putting pressure on the nation’s government to implement more reforms and ease its monetary policy.
The latest growth figure matched those seen in the first quarter of the year which was the lowest level for three years.
Brinda Jagirdar, chief economist at State Bank of India, said that India’s central bank needed to cut interest rates to help revive growth.
The central bank, the Reserve Bank of India (RBI), has so far resisted the calls to lower borrowing costs, saying its focus is to keep inflation under control.
However, Ms Jagirdar said that “there is a wide-scale slowdown in growth and focus now should shift from inflation to growth”.
“Growth has become critical as consumption is stalling on top of continued investment slowdown,” she added.
The main reasons for India’s weakening growth are a weakening in the demand for global exports, a fall in foreign investment and a political stalemate over the reforms needed to attract foreign investment in the nation’s key industries.
Analysts said these measures, coupled with signs of improvement in major economies such as the US, were likely to have a positive impact on growth in the coming months.
“The global environment is improving, some policy action is happening in India that will boost overall business sentiment and improve the investment climate,” said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai.
“Agricultural outlook is [also] likely to be better than previously expected, which will aid growth.
“The second half of the fiscal year will be slightly better than the first half, and we expect growth to be around 6% during the period,” he added.
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