Q3 GDP at 7% in line with expectations: India misses opportunity for economic acceleration

Q3 GDP at 7% in line with expectations:
India misses opportunity for economic acceleration

 

Mumbai, March 1, 2017: The Q3 FY 17 GDP estimates at 7% are broadly in line with expectations and echoes the projections put forward by leading international organisations including World Bank and IMF. Many sectors such as agriculture and mining performed better than expectations. However, demonetisation and the resultant slowdown denied India an opportunity to accelerate economy faster.

Mr. Vijay Kalantri, President, All India Association of Industries (AIAI) said, “Government must take steps to revive corporate investments. Demonetisation has severely impacted the consumption cycle and dried the corporate investments. It’s therefore important for the Government to make efforts to enhance the public expenditure in various capital intensive and infrastructure sectors.”

India is at the cusp of economic threshold with rising inflation coupled with steadily increasing international oil prices and roll-out of GST in FY18. Rising bank NPAs and slow credit offtake has lowered the corporate investment. MSME sector is reeling under heavy pressure due to revenue loss and resultant job losses. In such a situation, Government must take proactive steps to lower interest rates to boost corporate investment and thereby fuel consumption as RBI has till now reduced the policy rate cumulatively by 175 bps, however banks have not fully transmitted these benefit to borrowers. The weighted average lending rates are down only by 85-90 bps.

After nearly 2 years of dry monsoon, last year’s good monsoon has helped raising the farm income and it will have cascading positive effects on the overall economy.