India's slumping economy could hurt Modi's re-election bid

14:12 | 18/03/2019 Global Economy

India's economy has hit a soft patch just as national elections loom.

The growth slump is bad news for Prime Minister Narendra Modi as he seeks a second term in office

The country'sannual rate of growth slumped to 6.6% in the quarter ended December. That's a sharp drop from 7.1% recorded the previous quarter and the weakest performance in more than a year. Economists surveyed by Reuters were predicting GDP growth of 6.9%.

The plunge is a troubling sign for Prime Minister Narendra Modi as he bids for a second term in office.

India's elections are due to be held before May, and Modi's stewardship of the economy has come under increased scrutiny ahead of the vote.

The Indian leader came to power in 2014 promising to createmillions of jobsand boost the economy. But growth is down from its recent peak of 8.2%in the middle of 2018, and a recent study showed that unemployment has risen across the country.

India is still the world's fastest growing major economy after China's growth slowed to 6.4% in the last quarter of 2018. But analysts say the comparison won't matter to voters who feel they're not reaping the benefits of India's relatively strong growth...

India's economy has suffered collateral damage from global pressures like the US-China trade war and a spike in oil prices, said Anubhuti Sahay, India economist at Standard Chartered.

The country's central bank, the Reserve Bank of India, tried to shore up growth by slashing interest rates for the first time in six monthsin February. Sahay anticipates the slowdown will result in them being brought down further at the bank's next meeting in April.

"From the policymakers' perspective, it clearly paves the way for another rate cut," she said.

Theo CNN