India’s economic growth probably slowed to around 5 percent in the three months to September, slipping from 5.7 percent in the previous quarter, two government sources said, putting pressure on the central bank to cut interest rates.
The sources also said that Finance Ministry Arun Jaitley would argue for Reserve Bank of India (RBI) Governor Raghuram Rajan to lower interest rates when the two meet ahead of an RBI interest rate decision next Tuesday.
“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 told Reuters.
“A rate cut is the only hope for industry facing poor domestic and external demand.”
Official GDP data for the second quarter of the current fiscal year ending March is due for release this Friday.
“Economic growth for the second quarter is expected to be around 5 percent, mainly due to a decline in farm and industrial output growth,” the source, who declined to be named, told Reuters on Tuesday.
“At the most, I can see the second quarter growth hitting 5.2 percent,” he said.