The Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday that India's gross domestic production (GDP) growth at 5 per cent came as a surprise and was much lower than anticipated.
"We (the RBI) predicted growth at 5.8 per cent. Nobody predicted less than 5.5 per cent. The number came as a surprise, worse than all predictions," the RBI Governor told news channel CNN News18.
The RBI Governor said that bringing back the economy on growth trajectory should be the highest priority of the government.
Last week, International Monetary Fund (IMF) had said that India's economic growth is "much weaker" than expected, attributing it to the corporate and environmental regulatory uncertainty and lingering weaknesses in some non-bank financial companies.
"We are analysing as to why the growth figures are so low," Das said.
In August, RBI in its monetary policy review lowered its GDP growth projection for 2019-20 to 6.9 per cent from its June estimate of 7 per cent.
The signs of economic slowdown were visible as early as February, said Das, adding that the RBI is looking at ways to improve its forecasting methods. The Monetary Policy Committee (MPC) will take a view of the GDP growth projection at the next meet, he said.
"After that, 4 MPCs... if you see the minutes of the MPC the narrative is very clear. There is a slowdown, which was evident and at the last MPC..., we therefore, very clearly said that growth seems to be losing traction, and therefore, growth is a matter of highest priority," Das said.
Responding to a question on drone attack on two oil plants in Saudi Arabia, he said that this will hurt global oil supply and cause oil prices to jump over 10 per cent. The cut in production by Saudi Arabia's Aramco may have some impact on current account deficit (CAD) and fiscal if the situation lasts longer, he added.
India's GDP growth slipped to 6-year low of 5 per cent in June quarter as compared to 5.8 per cent in the previous quarter, weighed down by slump in manufacturing output, weak consumer demand and deceleration in private investment.
The less-than-anticipated GDP growth rate puts further pressure on the Modi government to announce meaningful reforms that can get growth back on track.
Edited by Chitranjan Kumar