1 Aug 2012

Growth forecast for India cut

8:05 am on 1 August 2012

The Reserve Bank of India has cut its growth forecast for this financial year to 6.5% from 7.5%.

It also left the key interest rate unchanged at 8% for the second consecutive month.

Meanwhile, Home Minister Palaniappan Chidambaram has been appointed as the new finance minister in a cabinet reshuffle.

The BBC reports India targets annual growth of 9%. Last year, the economy expanded by 6.1%, down from 8.2% in 2010.

India's economy grew at an annual rate of 5.3% between January - March, its slowest pace in nine years.

The bank hinted in a recent report that it was unable to cut interest rates further, despite pressure to boost the country's economy, as growth slows but inflation remains high.

Inflation is about 7%, higher than many emerging economies.

The RBI has taken various measures in an attempt to control rising prices, including increasing interest rates 13 times since March 2010.