02.05.2017 15:19:06 – India to clock 7.1% GDP this year : United Nations
The report said, India’s growth
would edge up to 7.5 per cent next year. It however, warned that the country faces heightened risks related to the concentration of bad loans in the public sector banks.
According to ‘The Economic and Social Survey of Asia and the Pacific 2017’ report released by United Nations , India is likely to clock 7.1 % growth this year as “re-monetisation restores consumption, and infrastructure spending increases, before edging up to 7.5 % in 2018 , warning that the country faces heightened risks related to the concentration of bad loans in the public sector banks.
The UN Economic and Social Commission for Asia and the Pacific (ESCAP) in its annual flagship report launched recently said that Indian economic growth is anticipated to be stable at 7.1 % in 2017 before edging up to 7.5 % in 2018, underpinned by higher private and public consumption and increased infrastructure spending.
As per the report ,the gross non-performing assets ratio in public sector banks reached almost 12 % in 2016, which points to the need for “bank recapitalisation”. Inflation is expected to reach 5.3-5.5 % in 2017 and 2018, being somewhat above the official target of 4.5-5 % .
While the impact of demonetisation on the economy is likely to be temporary, a slower-than-expected revival would predominantly lessen the outlook for cash-intensive sectors and supply chains for agricultural products.
Notwithstanding its short-term disruptions, the report said one of the medium-term benefits of demonetisation was to help expand banking sector liquidity. “The country’s medium-term economic development will also benefit from recent reforms that are aimed at easing domestic supply bottlenecks, such as the implementation of the goods and services tax, amendment of a bankruptcy law and opening up of the pharmaceuticals, defence and civil aviation sectors,” it said.
Fixed investment continued to contract as stressed corporate balance sheets suppressed firms’ appetite for additional spending.
Overall, the still rapid output growth in 2016 benefited from a modest recovery in agriculture due to an improved monsoon season and robust growth in public administration following public sector salary increases, it said.
Despite the overall fiscal tightening, capital expenditure under the budget for fiscal year 2017/18 is about 25 per cent higher than that in the preceding budget.
The report tinted that in spite of a largely positive economic outlook for 2017, Asia-Pacific economies are vulnerable to rising global uncertainty and trade protectionism. The region’s developing economies are expected to grow at 5 % and 5.1 % in 2017 and 2018 up from 4.9 % last year.The projected moderate Asia-Pacific economic growth faces risks from rising protectionism and global uncertainty, it added.
The report estimates that a steeper-than-anticipated increase in these factors could reduce average regional growth in 2017 by up to 1.2 percentage points.It has been emphasised that better governance for effective mobilisation and use of fiscal resources is critical to advancing the 2030 Agenda for Sustainable Development.
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