Niti Aayog vice chairman Rajiv Kumar has said the economic slowdown that began in 2013-14 has bottomed out and the GDP is likely to grow 6.9-7% this fiscal and 7.5% in 2018-19.
The economic growth slowed to 7.1% in 2016-17, the year in which 87% of the currency was demonetised, despite a very good show by the agricultural sector. On a quarterly basis also, the growth in the first quarter of the current fiscal has slipped to 5.7%.
“I think by the time you come to the first quarter of 2018, you will see a stronger recovery, and fiscal 2018-19 will be the much better year than fiscal 2017-18. And that will then continue because it will on much more sustained basis,” he said, adding that growth will be about 6.9-7% in the current fiscal year.
“In the next fiscal year, the growth would be about 7.5%,” Kumar said in an interview to PTI.
The Niti Aayog vice chairman said the country did very well from 2007-13 and the downward cycle started in 2013-14, mainly because of spurge in lending to undeserving projects since 2007.
“The high economic growth between 2007-13 was on the basis of huge increase in loans and spurge in private debt for which there was zero control. That was given by the banking sector to the most undeserving cases (projects) and on completely false assumptions,” he observed.
Noting that growth stalled after 2013 because of policy stance, Kumar said, “As soon as that happened, all the debt began to becoming bad and therefore downward spiral started.”
“My considered view and gut feeling is that, this downward cycle has now bottomed out in July,” he asserted.
While the International Monetary Fund (IMF) has lowered India’s growth forecast for the current fiscal by 0.5 percentage points to 6.7%, the World Bank has pegged economic expansion at 7%, down from 7.2% projected earlier.
The Asian Development Bank too lowered India’s current fiscal growth to 7% from 7.4%, while the RBI cut economic growth forecast to 6.7% from earlier projection of 7.3% .