Interest rates are now at their lowest level since March 2010 (Indranil MUKHERJEE)

Mumbai (AFP) – India’s central bank on Friday cut interest rates for the fifth time this year, putting them at a near-decade low, while it also slashed its growth forecasts as authorities struggle to kickstart Asia’s third-largest economy.

The Reserve Bank of India (RBI) said the benchmark repo rate — the level at which it lends to commercial banks — would be reduced by 25 basis points to 5.15 percent, their lowest since March 2010.

The RBI “decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target”, the Mumbai-headquartered bank said in a statement.

The rate cut was in line with a survey of economists by Bloomberg News.

The bank also slashed its economic growth forecast for this financial year to 6.1 percent, from 6.9 percent, noting that the global economy has been losing steam owing to trade uncertainty.

Analysts said more rate cuts could be on the cards in December as officials try to ramp up rural consumption and economic activity. 

“Demand in India is abysmally low and GST (goods and services tax) returns were at an 18-month-low in August, reflecting muted consumption demand,” Garima Kapoor, economist at Elara Capital told AFP.

“RBI has room for rate cuts in the range of 15-30 basis points in December as per benign inflation dynamics”, she added.

In June, India’s economic growth slowed for the fifth straight quarter to 5.0 percent, according to official figures. 

In August, the country’s once-booming auto sector — seen as a crucial barometer of economic health — reported slumping sales for the 10th-straight month, forcing companies to shut down manufacturing plants.

Desperate to ramp up investment, Finance Minister Nirmala Sitharaman last month announced corporate tax rates for domestic firms would be slashed by almost a third to 30 percent, making it one of the lowest in the region. 

Experts say the tax reforms are aimed at attracting companies spooked by the China-US trade war.

Authorities have in recent weeks rolled out a series of measures to boost the economy and battle grinding unemployment, which is at its highest since the 1970s.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.