India could add to interest rate and tax cuts announced early this month as declining output and exports indicate Asia’s third-biggest economy is headed for a deeper than expected slowdown, a government official said.
“The government is committed that whatever steps are required to be taken in the near future as the scenario further unfolds will be taken,” Ashok Chawla, India’s economic affairs secretary, said in an interview in Hong Kong yesterday.
India’s industrial production declined in October for the first time in more than 15 years, adding to evidence the US$1.2 trillion economy may expand at the slowest pace in six years as weaker domestic demand and waning exports force companies to cut production.
“The present priority is to ensure that the economy doesn’t slow down very much and that growth is not hampered,” Chawla said. “That’s the main objective at this point.”
Weaker production and exports may hurt India’s economic expansion. South Asia’s biggest economy could grow 7 percent in the year to March 31 from 9 percent or more annually in the previous three years, the government expects.
The economy may slow more than initially estimated and the central bank will revise downwards its earlier forecast of 7.5 percent growth in its Jan. 27 policy meeting, Governor Duvvuri Subbarao said. The economy will face a period of “painful adjustment” as the world sinks into recession, the central bank said on Dec. 6.
India’s economy expanded 7.6 percent in the three months to Sept. 30 from a year earlier, the slowest pace since 2004.