The World Bank has decelerated India’s growth for 2016-17 fiscal to a “still robust” 7% from its previous estimate of 7.6 due to demonetisation, but asserted that the country would regain momentum in the following years with 7.6 and 7.8% growth. “A benefit of ‘demonetisation’ in the medium-term may be liquidity expansion in the banking system, helping to lower lending rates and lift economic activity,” the World Bank noted. “Unexpected “demonetisation’—the phasing out of large-denomination currency notes which were subsequently replaced with new ones—weighed on growth in the third quarter of FY2017,” the World Bank said. While public investment rose by 21 % in FY2016, private investment (which accounts for two-thirds of the total) contracted by 1.4 %, reducing overall investment growth to four %. According to the Bank, India’s steep private investment slowdown has been attributed to several factors.

Source: Hindustan Times January 11, 2017 05:01 UTC