India's Slowing Economic Growth: Manufacturing and Consumption Woes

India's economic growth slowed significantly in July-September, with manufacturing and consumption seeing weaker expansions. GDP grew by 5.4% year-on-year, down from 6.7% in the previous quarter. Economists cite urban spending slowdown, high inflation, and borrowing costs as contributing factors. Pressure mounts on the central bank to cut interest rates.

India's economic growth encountered a concerning slowdown in the July-September period, driven by weaker expansions in the manufacturing and consumption sectors. The GDP growth of 5.4% fell short of expectations and marked its slowest rate in seven quarters, as revealed by data on Friday.

The decline is attributed to factors including decreased urban spending, rising food inflation, high borrowing costs, and weak real wage growth, despite some recovery in rural demand. Manufacturing growth plummeted to 2.2% from 7% in the previous quarter, economists reported.

With inflation at around 6%, demand for goods is being suppressed, particularly in urban regions. The Reserve Bank of India faces mounting pressure to consider interest rate cuts to stimulate economic activity, as government forecasts suggest potential growth recovery in the coming months.

(With inputs from agencies.)