India’s Growth May Decelerate Further Despite Election Spending


India’s Growth May Decelerate Further Despite Election Spending

Billions of dollars of pre-election spending by the Indian government and political parties in the next two months is unlikely to stop the nation’s economy from slowing further, economists said.

Asia’s third-largest economy lost momentum in the final quarter of 2018, as the annual rate of growth slipped to 6.6 percent, much lower than expected and the slowest pace in five quarters.

But the worst may not be over.

Prime Minister Narendra Modi, who will be seeking a second term in elections due to be held by May, in an interim budget last month introduced populist spending measures worth 1.8 trillion rupees ($25.37 billion) and modest tax cuts in the current fiscal year ending March 31 in an attempt to win the votes of farmers and the urban middle class. That is on top of additional spending at state government level. Read more

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