India’s economy grew at its slowest pace in more than six years in the July-September period, down to 4.5% from 7.0% one year ago, according to government figures released Friday that piled more pressure on Prime Minister Narendra Modi.
The expansion in Asia’s third-largest economy fell from 5.0% in the previous quarter.
The falling growth, now well below the level needed for India to provide the millions of jobs required each year for new entrants to the labor market, poses a major headache for Modi.
His government is struggling to kick-start what was once the world’s fastest-growing major economy as consumer demand shrinks and unemployment surges to a four-decade high.
Finance minister Nirmala Sitharaman has announced reforms, easing restrictions on foreign investment in key sectors, slashing corporate taxes, and launching a privatization drive aimed at reviving moribund state-run firms.
The country’s central bank, the Reserve Bank of India (RBI), has cut interest rates five consecutive times this year in a bid to boost lending.
But none of the measures have raised consumer confidence. Demand for everything from cars to cookies has plummeted.
The slump has already seen India lose its position as the fastest-growing major economy to China this year.
China said last month that its economy grew 6.0% in July-September, down from 6.2% in the second quarter.
Economists expect India’s central bank to announce yet another rate cut on Thursday to combat a liquidity crunch caused by the collapse of India’s shadow banking sector. Rates are currently at a nine-year low.