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The growth rate should not exceed 5% for the current fiscal year, compared to 6.1% in its previous estimates. A rate far from sufficient for the South Asian giant.
This is bad news for the Narendra Modi government. According to new Central Bank estimates, the growth rate should not exceed 5% this year.
A figure that may seem enviable seen from abroad, but is far from enough to create the millions of jobs that the country needs. The unemployment rate of the South Asian giant is currently breaking records, it has never been higher in forty years.
Need more than 8% growth
Every month, over one million people enter the labor market. In order to absorb all these newcomers, economists estimate that Indian growth should reach 8%. For several months, the government has been trying to revitalize the economy with investments in infrastructure, a drop in corporate taxes, and a relaxation of foreign investment rules.
But for the moment, growth remains slow. In the last quarter, completed in September, it even recorded its lowest rate in six years: 4.5%. Despite these poor performances and to everyone's surprise, the central bank has chosen not to continue to lower its key interest rate for the moment. This, because of inflation.
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In this context, Narendra Modi's ambition to make India a $ 5 trillion economy by 2024 seems increasingly difficult to achieve.