Indias economic growth hurt in 2017; here is what UN has blamed it on

The goods and services tax (GST) and the twin balance-sheet problem pushed India’s growth rate down to 6.6 percent in 2017 from 7.1 percent in the previous year, a United Nations report said. However, the country is expected to grow at 7.2 percent this year on the back of a gradual recovery, said the report by the United Nations Economic and Social Commission for Asia and the Pacific.

Twin balance-sheet problem refers to the stress on balance-sheets of both lenders and corporate borrowers.

“Weak corporate and bank balance-sheets also contributed to a sharp slowdown in investment. Thus, simply lowering policy interest rates was not enough to revive investment in that country,” said the report titled Economic and Social Survey and Asia and the Pacific 2018.

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But India’s GDP is estimated to grow at 7.2 percent in 2018 and 7.4 percent in 2019.

A gradual recovery is likely with private investment expected to revive as the corporate sector adjusts to GST, the report said. It, however, pointed out that if India does not effectively address the twin balance-sheet challenge, it will continue to face weak private investment and modest economic growth.

Source: DNA Money