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India's GDP Growth Set to Decelerate Ahead
Tue, 28 Feb Pre-Open

Let's talk about GDP today. Consensus estimates of GDP growth have reduced considerably in the last few months. Many now expect the GDP growth for FY17 below 7%, all thanks to the government's notebandi move.

The official estimate by the Central Statistics Office (CSO) in this regard is set to be released today. And as per financial dailies, the CSO is expected to peg India's GDP growth below 7% in FY17. This is said as the numbers this time are going to include the impact of notebandi move that had dented the consumption demand in the economy for past few months.

The CSO's first estimate released on January 6 pegged growth at 7.1% in FY17. However, the CSO didn't factor the negative impact of notebandi in this estimate. It couldn't because it did not have the data to do so.

Here is what Dr Jim Walker, founder and chief economist of Asianomics Group, had to say about the above estimates in one of his latest Asianomics Macro updates:

  • The government's new growth forecasts are not only optimistic but downright bizarre. The market is concerned that even with the new (still optimistic) growth forecast of 7.1%, the government's budget deficit target of 3.5% of GDP will be overshot.

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A while back, in an interview with Vivek Kaul and Rahul Goel, CEO of Equitymaster, Dr Jim Walker had shared his views on a variety of topics including the Indian and Chinese economies. It's worth revisiting.

One shall note that the Indian economy is still facing troubles on the back of notebandi drive initiated by the government.

The index of industrial production (IIP) for December 2016 contracted to a four-month low led by the notebandi move. Also, the manufacturing sector witnessed a contraction of 2% YoY in December 2016.

Furthermore, as per the Assocham's Bizcon Survey, demonetisation is said to leave quite a negative impact on SMEs, rural consumption, and job creation in the short-term.

So the above data points suggest that notebandi shocks are playing out. And as things stand at present, there aren't many signs of growth recovery happening. The government will continue with its lies to tell us that all is well on the notebandi front, but that doesn't make the situation any better for the common man.

In his latest book, India's Big Government-The Intrusive State and How It is Hurting Us, Vivek Kaul has exposed the big government's lies. And we're sure you would want to know the full story as this affects your money and wealth.

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Nov 24, 2017 (Close)