India’s economic growth slowed to 5.4% in the July-September quarter, marking a seven-quarter low and prompting concerns over prospects. The surprise drop led the Reserve Bank of India (RBI) to revise its growth forecast for 2024-25 from 7.2% to 6.6%.

The slowdown in India’s economy has led to calls for the Reserve Bank of India (RBI) to cut interest rates to boost demand, with finance and commerce ministry officials supporting this move. The government and RBI have differing views on growth and inflation.

A finance ministry report suggested that the RBI’s policies and other factors contributed to weaker demand in the economy.

While urban demand has fallen, rural demand remains strong, providing a positive outlook for future growth. Recent data shows some economic recovery and easing inflation, though high food prices, especially vegetables, remain a concern.

These factors have raised hopes for an interest rate cut in February, but global monetary policies, particularly in the US, complicate the decision.

Global uncertainty and the potential US tariff policy under President-elect Donald Trump are adding further pressure. While some Indian policymakers see benefits if the US imposes tariffs on China, others are preparing for possible negative impacts on India.

Economists and experts, in a meeting with Prime Minister Narendra Modi, stressed the need for continued reforms to boost growth amidst global challenges. The Union Budget, expected in February, is anticipated to outline the government’s strategies to stimulate growth and protect the economy, with hopes for tax cuts to boost consumer spending.

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