This news is disappointing for the economy. Many brokerage firms have already said that India’s growth will be affected because of US tariffs. At the same time, news agency Reuters did a poll of economists. In this poll, most experts said that India’s economy may slow down to about 6.7% in the April–June quarter.
The Reuters poll was done between 18 and 26 August. In this poll, 70 economists gave their opinion. They said India’s GDP growth may be 6.7% this time, compared to 7.4% in the last quarter. This poll result is a little higher than the RBI estimate. RBI had said GDP growth may be 6.5% in the second quarter.
Reasons for Slow GDP Growth
According to the poll, the fall in industrial activity and private investment is the main reason for slow GDP. The government has increased capital spending, but private investment went down because consumer demand was weak.
Increase in Capital Spending
As per June data, capital spending grew by about 52% on a yearly basis. Around ₹2.8 trillion was spent on infrastructure. PM Modi has also suggested lowering taxes on daily goods and small cars to increase demand.
RBI’s Efforts and Challenges
RBI is trying to push GDP growth. This year, RBI cut interest rates two times, a total of 75 basis points, which was more than expected. But the effect on GDP is still not clear. Also, many banks have not passed the benefit of lower rates to consumers.