Nifty99000 100%

Sensex99000 100%

Article rating: 4.3
Article rating: No rating
Article rating: 2.0
Article rating: 1.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: No rating
RSS

News

GDP growth of 6.75-7.5% faces downside risks: Economic Survey-II

Author: IANS/Friday, August 11, 2017/Categories: Economy

GDP growth of 6.75-7.5% faces downside risks: Economic Survey-II

New Delhi, Aug 11 - India's GDP growth projection of 6.75-7.5% for the current fiscal faces downside risks from deflationary impulses generated by various factors, according to the government's Economic Survey-II unveiled on August 11.

"Economy is yet to gather its full momentum and still away from its potential," said the Finance Ministry's Economic Survey 2016-17-II tabled in Parliament. 

The Survey, authored by Chief Economic Advisor (CEA) Arvind Subramanian highlighted decline in farm revenues and non-cereal food prices, farm loan waivers, fiscal consolidation and declining profitability in the power and telecommunication sectors as the factors generating deflationary tendencies. 

"These include: stressed farm revenues, as non-cereal food prices have declined, farm loan waivers and the fiscal tightening they will entail and declining profitability in the power and telecommunication sectors, further exacerbating the twin-balance sheet (TBS) problem," the survey said.

The November demonetisation took a toll on the Indian economy with the Gross Domestic Product (GDP) during the fourth quarter, ending March this year, falling sharply to 6.1% from 7% in the previous quarter while growth for entire 2016-17 also declined correspondingly.

Currency in circulation declined significantly following the demonetisation of high-value notes. The Survey said that, as on the end of the last fiscal on March 31, currency in circulation contracted by 19.7% whereas reserve money contracted by 12.9%.

It also noted that credit off-take from banks continued to decelerate further. During 2016-17, gross bank credit outstanding grew at around 7% on an average. The average gross bank credit to industry contracted by 0.2% during the last financial year.

The Survey expressed concern about sluggish growth and increasing indebtedness in some sectors of the economy, which has impacted the asset quality of banks. 

The gross non-performing advances (GNPAs), or bad loans, ratio of bank rose from 9.2% in September 2016 to 9.5% in March 2017, it said.

The survey also said retail inflation was expected to remain below the Reserve Bank of India's (RBI) medium-term target of 4% up to the end of March 2018. Retail inflation in June fell to its lowest level in more than five years to 1.54%. 

It, therefore, saw "considerable" scope for further easing by the RBI of its key lending rate.

Subdued inflation and demand prompted the RBI earlier this month to reduce its key lending rate by 25 basis points to 6%. This was the first rate cut after the 25 basis points cut made in October last year.

Print Rate this article:
No rating

Number of views (358)/Comments (0)

S Vijaykrishnan
S Vijaykrishnan

IANS

Other posts by IANS
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free