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India’s GDP growth hits 3-year low
August 31, 2017, 3:31 pm

File photo: A Worker pastes stickers on bicycle parts at a factory at Ludhina in Indian state of Punjab [Xinhua]

India’s gross domestic product grew 5.7 per cent in the latest quarter, according to data released by the central statistics office on Thursday.

Economic growth dropped to a three-year low of 5.7 per cent during April-June as manufacturing slowed.

“GDP data throws up challenges for the economy,” India’s Finance Minister Arun Jaitley said while addressing a press conference in New Delhi.

The manufacturing sector slowed to 1.2 per cent in the June quarter from a 10.7 per cent growth last year.

Thursday’s data shows the shock from an earlier cash ban has not faded yet.

Indians have deposited nearly all the currency bills outlawed at the end of the deadline last year, dealing a blow to Prime Minister Narendra Modi’s drive to unearth unaccounted wealth and fight corruption.

The Central Bank said on Wednesday that 99 per cent of the estimated 15.4 trillion rupees ($242 billion) banned last year has made its way back into the banking system.

The government had initially estimated about 5 trillion rupees, of the 15.4 trillion rupees rendered worthless by “demonetisation” on November 9 last year, to remain undeclared as it may have escaped the tax net illegally.

Writing in The New York Times, former World Bank chief Kaushik Basu argued much of the current economic slowdown can be attributed to the note ban.

“Demonetization failed to do what it was supposed to do, and although the immediate disruption it caused was less severe than feared at first, the policy’s impact is turning out to be more protracted than initially expected,” he wrote.

 

TBP and Agencies

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