India's economic outlook has dimmed as the government revised its growth forecast for the fiscal year ending in March to 6.4%, the slowest rate in four years. This adjustment reflects a decline in investment and manufacturing, following disappointing economic indicators and corporate earnings.
The downgrade has prompted calls for the government to stimulate the economy by loosening monetary policy and reducing fiscal tightening. Finance Minister Nirmala Sitharaman is currently engaging with industry leaders to discuss potential measures, including tax cuts and increased consumer spending.
The Nifty 50 index has seen a significant decline of 12% from late September to November, although it managed to recover slightly to end the year up 8.7%. The central bank's tight monetary policy has been cited as a contributing factor to diminished demand.
In a recent shift, Prime Minister Narendra Modi appointed Sanjay Malhotra as the new central bank governor, signaling a potential pivot toward prioritizing economic growth over price stability. The rupee has also faced challenges, hitting a new all-time low as it continues a seven-year downward trend, largely due to a strengthening dollar.
Analysts suggest that India must implement effective tariff rationalization to enhance its global trade position, particularly in light of changing U.S. trade policies under President Trump.