India: 7.5％ GDP growth unlikely this year

By APD Writer Rishika Chauhan

NEW DELHI, August 14 (APD) -- Indian economy’s growth rate will remain less than 7.5% this fiscal year, according to a mid-year-economic survey released by the government on Friday.

The survey explains that owing to agricultural stress, farm loan waiver and the implementation of the new Goods and Service tax, Asia’s third-largest economy will slow down.

Arvind Subramanian, the chief economic adviser said, “It is unlikely than before that we will achieve the upper end of the growth estimates.”

In the fourth quarter, which ended in March, the growth slowed to 6.1% after the government’s decision to demonetize 500 and 1000 rupee banknotes in November. The move wiped out more than 80% of the cash in circulation to clamp down on tax evaders in the country.

However, according to some scholars, the growth rate for the full year is expected to reach 7.1%. The World Bank and the International Monetary Fund have projected a growth rate of 7.2% for this year.

The survey said that the Goods and Service tax, a stronger rupee, and the decision to privatize the national carrier, Air India, have “rekindled optimism” on the pace of structural reforms.

Moreover fiscal deficit is expected to dip from 3.5% of the Gross Domestic Product (GDP) in 2016-17 to 3.2% in 2017-2018.

“The real challenge is short term growth. We need to bring all policy support required to revive short-term growth,” Subramanian said.

The opposition parties have warned that a slow GDP growth could decrease the number of new jobs and hit private investment in India.

(ASIA PACIFIC DAILY)