A hypothesis that has come to acquire some currency in academic circles is that the dent in India’s GDP growth rate can be squarely attributed to the disruptive effects of demonetization and the introduction of GST. This is specious reasoning that fails to account for the sustained fall in the GDP growth rate from its high of 7.9 per cent in the first quarter of FY17. To look at the sharp fall in the GDP growth rate from the lens of demonetization and the inventory destocking before the introduction of GST is to miss the woods for the trees. The brainstorming session over reviving a slumped GDP growth rate chaired by Finance Minister Arun Jaitley is a heartening step in this direction. Additionally, private investment — seen as a percentage of the GDP — has taken a beating as well, sliding down to 21.9 per cent.

Source: dna September 21, 2017 02:36 UTC