India’s GDP growth should have been back at 9% by now: Former Chief Economic Adviser Kaushik Basu
The economist said the significant drop in global oil prices should have taken growth back on track.
India should be recording 9% year-on-year growth in its Gross Domestic Product again, as oil prices have fallen much lower since the economic boom, former Chief Economic Adviser Kaushik Basu said on Sunday. He called for the “massive slowdown” in the economy to be “properly diagnosed”.
“India’s growth rate is now 6.3%,” Basu said on Twitter. “It had reached a rate of 9.5% from 2005 to 2008. Now, with oil prices so low, the growth should have been back at over 9%.”
Prices of crude oil reached close to $140 (around Rs 9,000) a barrel in 2008 but have hovered below $50 (Rs 3,200) a barrel for a significant period since 2014, falling to $29 in February 2016. India is one of the largest importers of crude oil, and hence, a decline in its prices is a positive factor for economic growth.
India’s growth rate is now 6.3%. It had reached a rate of 9.5% from 2005 to 2008. Now with oil prices so low, the growth should have been back at over 9%. This massive slowdown needs to be properly diagnosed.
— Kaushik Basu (@kaushikcbasu) December 3, 2017
Basu’s tweet follows the latest GDP data released on Thursday, which showed that India’s economy recovered in the July-September quarter after a prolonged period of slowdown. India recorded a GDP growth rate of 6.3% during the quarter, reversing a five-quarter slowdown.
The government’s decision to demonetise high-value currency notes in November 2016 and issues related to the implementation of the Goods and Services Tax this July were blamed for the economic slowdown.