India is expected to record 7.1% economic growth this year before inching up to 7.5% in 2018, according to a United Nations report. The analysis released on Monday has also warned the country of the risks it faces from concentration of bad loans in public sector banks.
The United Nations Economic and Social Commission for Asia and the Pacific, in its annual flagship report titled “The Economic and Social Survey of Asia and the Pacific 2017”, said India’s economic growth would be the result of higher private and public consumption and increased infrastructure spending. Inflation is projected to reach 5.3% to 5.5% in 2017 and 2018.
Noting the impact of demonetisation, the report said the unexpected withdrawal of the two largest denomination currency notes on November 8, 2016, and their subsequent replacement with new bills had adversely affected economic conditions at the end of 2016 and early 2017. The resulting cash crunch had led to delays in the payment of wages and purchase of inputs in the industrial sector, the report said.
“While the impact of demonetisation on the economy is expected to be transient, a slower-than-expected recovery would particularly diminish the outlook for cash-intensive sectors and supply chains for agricultural products,” it added.