NEW DELHI: India’s economic growth slowed to 5.4% year-on-year in the September quarter, official data showed on Friday, a significant decline from 6.7% in the previous quarter.
Friday’s figure still places the world’s most populous country among the world’s fastest-growing major economies, but suggests a moderation in the meteoric expansion seen over the past year.
The data is expected to put pressure on the Reserve Bank of India to lower interest rates after keeping them at 6.50% for over 18 months.
The latest growth data could now prompt the bank to start cutting rates this year.
Year-over-year gross domestic product came in well below most analyst estimates.
The Indian economy had grown 6.7% year-on-year in the previous April-June quarter.
A government statement blamed the lower-than-expected growth figures on weak manufacturing and mining activity.
Moderating economic growth is also bad news for Indian Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP), which failed to win an outright mandate in this year’s general election, leaving it dependent on parties. of the coalition to govern.
His two biggest allies have reportedly requested billions of dollars in financial aid for infrastructure projects in their states.
Modi’s government pledged in its post-election budget to spend $24 billion on jobs and training to address uneven economic growth and appease disaffected voters.
Rising food prices in India have added to Modi’s political turmoil and also prevented the central bank from adopting an accommodative stance on inflation.
While India recorded a record growth of 8.2% in the year ended March, the International Monetary Fund expects the pace to slow to 7% for the 2024-25 financial year.