Sharp slowdown: Solutions will need to go beyond interest rate cuts

Some economists believe that a pickup in government capital expenditure will help accelerate growth

The gross domestic product (GDP) data, released by the National Statistics Office (NSO) last week, has surprised analysts. While most anticipated the slowdown in demand to reflect in the GDP data, no one expected the economy to expand just 5.4 per cent in the second quarter — a seven-quarter low. Economists at the Reserve Bank of India (RBI) are likely to be particularly disappointed, having projected a 7 per cent growth rate for the quarter in the October monetary policy review. With the economy growing only 6 per cent in the first half of the financial year, the RBI needs