Crumpling demand and expenditure, slowing investment all indicate that the economy is in a sudden stop which may bring down economic growth to below 7 % this year. Though a fall in growth rate was expected out of the present currency chaos, the stampede in growth will be high according to several private analysts.
Indications are that the economy may register its lowest growth rate since the global financial crisis year of 2008. The country’s economy which withstood the ongoing global recession is about to steep fall in the context of demonetization according to several estimates.
Ambit Capital who makes a very conservative assessment every time has revised GDP growth figures to 3.8% from 6.8%. Public sector forecasters are wary though they acknowledge the slow down.
Breakdown of consumption at the mass segment is the main reason suggested for the working on the GDP fall. Mass segment’s consumption has got a big beating amidst cash stringency. The lower income strata which get paid in cash and makes expenditure in cash has stuck on the point since demonetization day.
More restrictions are curbing the flow of money to the lower income section who have the high propensity to consume. According to impartial sources, the note printing activity will take few months and cash shortages will be solved only by April next year. That means economy will lose four months in growth map