India’s economic growth probably slowed to around 5 per cent in the three months to September, slipping from 5.7 per cent in the previous quarter, two senior Finance Ministry sources said, putting pressure on the central bank to cut interest rates.
The sources said Finance Minister Arun Jaitley would press Reserve Bank of India (RBI) Governor Raghuram Rajan to lower borrowing costs when the two meet ahead of a decision on interest rates next Tuesday.
Six months after Prime Minister Narendra Modi swept to power with a promise that “better days are coming,” growth of 5 per cent would mark a serious setback from the previous quarter and fall far short of the 8 per cent that Asia’s third largest economy needs to create enough jobs for its growing workforce. “When Rajan meets the Finance Minister ahead of the policy review, he would be urged to cut the interest rates,” one senior Finance Ministry official with direct knowledge of the matter said.
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“A rate cut is the only hope for industry facing poor domestic and external demand.”