MUMBAI • India's economic growth slowed for the fifth straight quarter in the April-to-June period to 5 per cent, government data showed yesterday.
But in an effort to ease the liquidity crunch that has dogged Asia's third-largest economy, the government also announced the merger of 10 public-sector banks into four new lenders.
The Indian economy has been suffering from weak consumer demand that saw car sales fall for the ninth month running in July.
Having this year lost to China its status as the fastest-growing major economy, the latest growth figure for India's first fiscal quarter fell well short of market expectations of 5.7 per cent.
This is despite India's central bank cutting interest rates four times this year to a nine-year low in an effort to boost activity.
On Wednesday, India's Cabinet eased curbs on foreign investment in four key sectors in an effort to attract more capital from abroad.
New Delhi is also bringing forward a US$10 billion (S$13.9 billion) liquidity lifeline for banks and rolling back a levy on equity sales that had spooked foreign investors.
The government is also getting US$24 billion from the central bank, potentially giving it extra room to cut taxes.
Finance Minister Nirmala Sitharaman said the 10 public-sector banks that will be merged into four lenders will hold business worth about 55.8 trillion rupees (S$1.1 trillion), or 56 per cent of the Indian banking industry, Bloomberg News reported.