India cut its key interest rate yesterday for the first time in nine months, a move that it hoped would help to boost economic growth.
There has been mounting pressure from the government and industry in recent months for the Reserve Bank of India (RBI) to reduce the cost of borrowing. Signs of easing inflation combined with serious concerns about slowing growth prompted it to lower the benchmark interest rate to 7.75 per cent from 8 per cent.
"Growth has decelerated significantly below trend through the last fiscal year and through this year so far, and overall economic activity remains subdued," said Duvvuri Subbarao, the governor of the RBI. "On the demand side, investment activity has been way below desired levels and consumption demand, too, has started to decelerate. External demand has also weakened due to languid global growth."
The National
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