MPC Stance May Be Behind H1 Demand Slowdown: FinMin

A combination of monetary policy stance and macroprudential measures undertaken by the Reserve Bank of India (RBI) may have contributed to demand slowdown in the first half (April-September) of FY25, which among other factors led to lower economic growth, the finance ministry said in its latest monthly economic review.

- Ruchika Chitravanshi

The November review said there are reasons to believe the outlook for growth in the second half would be better. "The possibility that structural factors may also have contributed to the slowdown in H1 should not be ruled out. The combination of monetary policy stance and macroprudential measures by the central bank may have contributed to the demand slowdown. It is good news that the central bank lowered the cash reserve ratio from 4.5 per cent to 4 per cent in its policy meeting in December 2024. That should help boost credit growth, which has slowed a little too much and quickly in FY25," the review said.