Indian economy is out of the woods as far as the impact of demonetisation is concerned and a turnaround will be seen in the first quarter of the current fiscal, NITI Aayog vice chairman Arvind Panagariya said today.
He also said the once ‘fragile economy’ is on an upturn over the last three years and a sustained growth of 8 per cent will now be possible within a few years. Panagariya’s comments come on the heels of India losing to China the fastest growing economy tag with its GDP growth rate slipping to 6.1 per cent in the January-March quarter of last fiscal. China, in contrast, recorded 6.9 per cent growth.
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“We are pretty much out of woods as far as demonetisation is concerned… We should see a good turnaround in Q1 of 2017- 18,” the former Columbia University economics professor said at a press conference. On November 9, 2016, the government had demonetised higher value currency which wiped off about 87 per cent of notes in circulation, leading to a severe cash crunch and disruption in the economic activities. Panagariya further said: “Modi government had inherited a rather fragile economy. We will grow at 7.5 per cent in the current year and before present term of the government ends, I would expect we would touch 8 per cent mark and probably enter another sustained growth trajectory of 8 per cent plus by the time government completes its term.”
India’s growth slipped to 3-year low of 7.1 per cent in 2016-17 on account of poor performance of manufacturing and services sectors. The GDP growth was at 8 per cent in 2015-16 and 7.5 per cent in the previous year. Describing Goods and Services Tax (GST) and Insolvency and Bankruptcy Act as some of the biggest reforms the Modi government has undertaken, Panagariya said infrastructure sector has received impetus during 2016-17.
On opposition parties’ allegations that the government has failed to create jobs, he said that the debate on jobs is happening in vacuum. “We have serious problem with the labour bureau data…A high level task force to compute data on employment situation recently had two meetings,” he added. Niti Aayog is going to finalise the National Energy Plan by July, he said, adding that “unbundling of Coal India will create competition and increase transparency in pricing”. He also said that NITI Aayog which is tasked by Prime Minister’s Office to look into viability of sick state-run companies has recommended closure of dozens of sick PSUs.