General elections 2019: Economic growth slows as PM Modi prepares for re-election

India`s economic growth fell to a worse-than-expected 7.1 percent in the July-September quarter, dragged down by a slower consumer spending and farm growth, in a setback for Prime Minister Narendra Modi who faces a national election by May. 

India`s growth is still faster than China`s 6.5 percent in the same quarter, but the figures were a come-down from the more than two-year high of 8.2 percent set in the June quarter. A Reuters poll of economists had forecasted growth of 7.4 percent for the quarter.

Having swept to power in 2014 promising to galvanise the economy, Modi has been criticised for failing to create enough jobs for the more than 12 million young Indians entering the labour force each year. India needs growth of 8-percent-plus to generate enough jobs for those workers.

The unemployment rate rose to a two-year high of 6.9 percent in October, with nearly 30 million young people looking for jobs, according to a report released this month by Centre for Monitoring India Economy (CMIE), a Mumbai based think tank.

Some economists expect the slowdown to stretch on to the election, or beyond - encouraging the government to raise spending and breach its fiscal deficit target.

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Anubhuti Sahay, head of economic research, South Asia, Standard Chartered Bank said the central bank was likely to retain its calibrated stance in December amidst uncertainties around crude oil prices and global growth.

"Reviving private investment and creating jobs are pre-requisites for a sustainable pick-up in growth," he said.

By: Manoj Kumar