India's GDP Growth Slows as Government Spending Lags
India's economic growth likely slowed to 6.9% in the December quarter, a Reuters poll found, as government spending lagged and higher interest rates weighed on demand.
The poll of 47 economists predicted gross domestic product (GDP) growth of 6.9% in the October-December quarter from a year earlier, slower than 7.6% in the previous quarter.
The Reserve Bank of India (RBI) has raised interest rates by 250 basis points since May to tame inflation, which has remained above the central bank's 4% upper tolerance limit for most of 2022.
Higher interest rates make loans more expensive, which can weigh on demand for goods and services and slow economic growth.
Government spending also slowed in the December quarter, as the government sought to contain its fiscal deficit. Government spending is a key driver of economic growth in India, and a slowdown in spending can have a negative impact on overall economic activity.
The slowdown in economic growth is a concern for the government, as it tries to boost job creation and reduce poverty. The government has set a target of achieving 8% GDP growth in the current fiscal year, which ends in March.
However, the latest poll suggests that the government may not be able to achieve its target, as economic growth is likely to remain below 7% in the coming quarters.
Conclusion
India's economic growth is likely to slow further in the coming quarters, as government spending lags and higher interest rates weigh on demand. This is a concern for the government, as it tries to boost job creation and reduce poverty.
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