Growth chill: Note ban impact on economy still uncertain; more pain to come

 

LATEST NEWS – India on Friday predicted robust economic growth in the financial year that ends in March, but without fully accounting for the disruption caused by Prime Minister Narendra Modi’s decision to abolish high-value old currency bills.

Gross domestic product (GDP) is estimated to achieve annual growth of 7.1 per cent in the financial year 2016/17, slower than a provisional figure of 7.6 per cent for 2015/16.

Most private economists have pared their growth forecasts to 6.3-6.4 per cent for 2016/17, citing the impact of demonetisation, which they reckon will linger for one more year.

Friday’s GDP estimate is a cornerstone of Finance Minister Arun Jaitley’s Budget on February 1. But the federal statistics office said the projection was mostly based on data available by the end of October.

PM Modi’s decision on November 8 to scrap Rs 500 and Rs 1,000 banknotes as part of a crackdown on tax dodgers and counterfeiters has inflicted pain on companies, farmers and households.

“I am very worried with the projected growth rate,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co. READ MORE

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