World Bank has reduced its India GDP growth forecast to 7% for 2017-18 from 7.2%, blaming disruptions caused by demonetisation and GST
New Delhi: After remaining the world’s fastest-growing region for eight consecutive quarters, South Asia has slipped to the third position behind East Asia and the Pacific regions, as India’s economy slowed to its lowest level in 13 quarters, the World Bank said on Monday.
This is at a time when other South Asian nations like Bangladesh and Nepal have registered strong economic growth.
In the June quarter of 2017-18, the Indian economy decelerated to 5.7%, lowest since the economy grew at 5.3% in the March quarter of 2013-14.
In its South Asia Economic Focus (Fall 2017), the World Bank reduced India’s GDP growth forecast to 7% for 2017-18 from 7.2% estimated earlier, blaming disruptions caused by demonetisation and the implementation of the goods and services tax (GST), while maintaining at the same time that the economy would claw back to grow at 7.4% by 2019-20.
Both the Asian Development Bank as well as the Organisation for Economic Cooperation and Development (OECD) have also cut their growth projections for India to 7% and 6.7%, respectively, for fiscal 2017-18.
The World Bank said the unexpected slowdown in India’s growth story is because of the delayed consequence of demonetization, sharp decline in the growth rate of public expenditures and uncertainty created by the introduction of GST.
The multi-lateral lending agency said that because the main explanations offered for the slowdown of the last quarter refer to temporary shocks, the growth rate could be expected to bounce back.
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