Why were some top Indian economists worried just days before the latest rate cut?

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In January 2015, India changed the way it calculated its GDP. This helped Asia’s third largest economy pole-vault into the world’s fastest growing one. Since then, even though the numbers have been strong, no one is quite sure how the economy is doing on ground.

The Narendra Modi government’s constant hard-sell notwithstanding, the Reserve Bank of India (RBI) isn’t painting the prettiest picture.

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For one, members of the central bank’s advisory council on monetary policy are still concerned over slow industrial growth and bleak rural demand.

On April 28, RBI released the latest minutes of a meeting of the technical advisory committee on monetary policy. This meeting was held before RBI governor Raghuram Rajan announced the monetary policy on April 5 when he cut the repo rate.

The panel, which includes economist Arvind Virmani and Michael D Patra, an executive director at the RBI, typically meets before deciding the monetary policy and votes on a rate cut or a hike or none. The members—internal and external—also discuss various indicators that help gauge the economy.

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Here is what the central bank is concerned about:

Industrial growth: Members of the council pointed out that although the current GDP trajectory is steady, industrial growth is still slack. This is mainly due to persistent weakness in manufacturing activity. “Industrial growth is low largely due to manufacturing, which, in turn, is driven by weakness in the capital goods sector,” the RBI report said.

Corporate stress: Indian companies aren’t ship-shape. The sticky debt issue is taking a toll on investments and capital expenditure (capex). Typically, companies with huge debts find it difficult to invest in expansion, and repaying debt becomes the priority. These are “risks to the revival of growth,” according to RBI.

“Data from the corporate sector are indicating a worsening (state), with debt concentrated among large corporates (especially in steel and power sectors). Stressed corporate balance sheets are pushing capex down, suggesting that private investment is likely to be flat in the short term,” the report said.

Exports: The committee members noted that slowing of exports is a problem that will affect the current account deficit—the value by which imports exceed exports.

“India’s exports are weak, and there has been no policy action to improve competitiveness. The current account deficit continues to be around 1.0-1.5% of GDP, despite large terms of trade gains,” according to the RBI report.

Inflation: Although Rajan has kept inflation under check, continuing this is a bit of a challenge. Retail inflation, as of March 2016, was at 4.83%, down from almost 8% in 2014. The movement of inflation is a key indicator of how monetary policy is shaped. According to the members, risks to the now-muted inflation include a recovery in oil prices, impact of the Seventh Pay Commission, and volatility in prices of perishable goods such as vegetables.

“Given these factors, headline inflation will likely be sticky going forward, with upside risks from unseasonal rains,” the report said.

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