The Indian central bank in its annual report, saying the economy faces slowdown, calls for urgent reforms to revive consumption and private investment.

Regarding the slowdown, the Reserve Bank of India says it could be cyclical, with deep structural problems. However, the RBI report says, “the diagnosis is difficult; these conditions are hard to disentangle cleanly, at least in the formative state.”

The central bank says reviving consumption demand and private investment will be the top priority in the current fiscal year, thereby hinting at a soft interest regime. It has already cut interest rates by 110 basis points in 2019.

To revive growth in Asia’s third-largest economy, Reserve Bank Governor Shaktikanta Das has urged the banks to pass on past rate cuts to borrowers at a faster pace by linking lending rates to external benchmarks such as the repo (repurchase agreements) rate.

As for the recent deceleration, the central bank report says it could be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural slowdown. It cautions that a broad-based cyclical downturn is under way in several sectors — manufacturing, trade, hotels, transport, construction, agriculture and communication and broadcasting

The report also calls for strengthening the banking and non-banking sectors, making a big push for spending on infrastructure and implementing structural reforms in the areas of labor laws, taxation, and other legal reforms.

The central bank forecasts India’s GDP to grow at 6.9% for the fiscal year 2020 — in the range of 5.8-6.6% during the first half of the year and 7.3-7.5% in the second half.