India GDP growth slows to 5.4% in September quarter

NEW DELHI: India's economic growth slowed to 5.4% year-on-year in the September quarter, official data showed Friday, a significant decline from the 6.7% during the previous quarter.

Friday's figure still places the world's most populous country among the fastest-growing major economies globally, but suggests a moderation in breakneck expansion seen over the past year.

The data is likely to put pressure on the Reserve Bank of India to cut interest rates after holding them steady at 6.50% for more than 18 months.

The latest growth data could now spur the bank to start cutting rates this year.

Year-on-year gross domestic product came in much below most analyst estimates.

The Indian economy had expanded 6.7% year-on-year in the previous April-June quarter.

A government statement laid blame for the lower than expected growth figures on sluggish manufacturing and mining activity.

The moderation in economic growth is also unwelcome news for Indian Prime Minister Narendra Modi's Bharatiya Janata Party (BJP), which failed to secure an outright mandate in this year's general elections, leaving it reliant on coalition parties to govern.

Its two biggest allies have reportedly sought billions of dollars in financial assistance for infrastructure projects in their states.

Modi's government pledged in its post-election budget to spend $24 billion on employment and training to address uneven economic growth and mollify disgruntled voters.

Rising food costs in India have added to Modi's political troubles and also prevented the central bank from shifting to a dovish stance on inflation.

While India posted world-beating growth of 8.2% in the year to March, the International Monetary Fund expected the pace to cool to 7% for the 2024-25 fiscal year.