Economic growth slowed in the July-September quarter, dragged down by a sluggish manufacturing sector and triggering calls from India Inc to cut interest rates and step up reforms to boost growth.
Growth slowed to 5.3%, slower than the 5.7% in April-June quarter but marginally better than 5.2% growth in the second quarter of 2013-14. Growth in the first half of the 2014-15 was at 5.5% compared to 4.9% in the same period in 2013-14.
Economists said they expect a slow and gradual recovery in the months ahead as investments are yet to pick up.The finance ministry said the second quarter growth numbers were “broadly on expected lines.“ The ministry said slower growth in the farm sector was expected due to the lower than-expected monsoon, while the slower expansion in the manufacturing sector was not surprising.
India Inc stepped up calls for cutting interest rates and accelerating reforms.
RBI governor Raghuram Rajan is expected to meet FM Arun Jaitley on December 1, a day ahead of the policy review. The FM is expected to renew calls for moderating interest rates to boost growth and revive investment.
Rajan is under pressure to cut rates against the backdrop of slowing inflation and some improvement in the government's fiscal situation due to easing of global crude prices.
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