India growth slowing down, Sri Lankan businesses told
ECONOMYNEXT – An Indian economist has questioned optimistic forecasts of strong growth in India, on which Sri Lankan exporters are placing much hope, saying the slowdown in the neighbouring economy appears systemic.
“The slowdown is seen as temporary but the slowdown in quarterly GDP started six quarters ago, before these developments,” said Radhicka Kapoor, referring to India’s demonetisation effect and the nationwide introduction of a Goods and services Tax (GST).
“We feel something else is slowing down growth,” she said at a forum in Colombo on financing urbanization in the Asia-Pacific region.
Kapoor said most recent projections show a growth slow down in 2016-2017 owing to the demonetisation effect and GST and that India’s economy will once again pick up as reforms kick in and India emerge as one of the leading economies in the world.
“We question such optimistic projections,” said Kapoor, Research Fellow at the Indian Council for Research on International Economic Relations, known as ICRIER.
De-monetisation and GST are one time shocks – they will phase out, she told the ADB–Asian Think Tank Development Forum 2017 in Colombo organized by the Asian Development Bank in partnership with the Institute of Policy Studies.
Kapoor said that in the first quarter of 2017 growth in India’s gross value added fell.
The industrial sector where India expects to create a large number of jobs slowed the most.
#India’s consumption boom was boosting GDP numbers but gross capital formation was falling and private sector investment had been “anaemic” over the last 4 years.
The small non corporate business sector which employs a large part of India’s workforce also slowed down.
Job creation was a challenge as 60% of the people are of working age, she said.
“Unless we are able to accelerate manufacturing growth we can’t create the required jobs for India’s rapidly rising workforce,” said Kapoor.
India’s exports were also slowing down which was worrying and that includes exports of services like software which was seeing stagnation.
(COLOMBO, Sept 28, 2017)