The Reserve Bank of India has announced a cut in its benchmark interest rate by 0.25 percent, marking the first reduction in nearly five years. This decision comes amid a slowdown in economic growth, which has dropped significantly due to rising food prices affecting consumption. RBI Governor Sanjay Malhotra indicated that a less restrictive monetary policy is now advisable. Despite India's status as one of the fastest-growing major economies, the GDP growth rate has suffered, prompting the government to implement various fiscal measures, including tax cuts, to spur economic activity.
The Reserve Bank of India (RBI) has cut its benchmark interest rate for the first time in nearly five years, lowering the repo rate by 0.25 percent to 6.25 percent.
RBI Governor Sanjay Malhotra stated that a less restrictive monetary policy is necessary given the current growth-inflation dynamics, emphasizing timely and carefully calibrated measures.
India's economic growth has slowed, with GDP statistics showing a decrease in growth rates, which poses challenges for the government's fiscal forecasts striving for growth above pre-pandemic levels.
The government's recent budget announcements included tax cuts to stimulate the economy amid concerns of sustained slower growth and rising food prices.
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