NEW DELHI: India's economic growth probably slowed to around 5 percent in the three months to September, slipping from 5.7 percent in the previous quarter, two senior finance ministry sources said, putting pressure on the central bank to cut interest rates.
The sources said Finance Minister Arun Jaitley would argue forcefully for Reserve Bank of India (RBI) Governor Raghuram Rajan to lower interest rates when the two meet ahead of a decision on rates next Tuesday.
Six months after Prime Minister Narendra Modi swept to power with a promise that "better days are coming", growth of 5 percent would be a serious slip back from the previous quarter and falls far short of the 8 percent that Asia's third-largest economy needs to create enough jobs for its growing workforce.
Official GDP figures are due for release on Friday. Indian finance ministers often "jawbone" the RBI on interest rates, but Jaitley's calls have become unusually insistent of late.
Aides say he will make the case for cuts forcefully when he meets Rajan.
"When Rajan meets the finance minister ahead of the policy review, he would be urged to cut the interest rates," one senior finance ministry official with direct knowledge of the matter told Reuters.
"A rate cut is the only hope for industry facing poor domestic and external demand," the official said.
Rajan, who is due to speak later on Tuesday in Modi's home state of Gujarat, has resisted calls to cut the RBI's 8 percent repo rate, even though retail price inflation has dipped below the 6 percent target he wants to hit by January 2016.
The hawkish former IMF chief economist has made it his mission to introduce inflation targeting to India, a country long plagued by double-digit price rises that hurt the more than 700 million people who live on $2 a day or less.
So while factors such as weak international oil prices and flagging export demand have prompted Asia's top two economies, China and Japan, to take aggressive action to ease monetary policy, Rajan has held out.
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