US: Talking about the economic growth of India, the United States President Donald Trump administration said that the growth of India has slowed down due to the effect of the structural economic reforms such as Goods and Service Tax (GST) and demonetization.
“Growth in India has slowed due to the effects of its structural economic reforms. India’s demonetisation of large-denomination notes in November 2016 invalidated 86 per cent of the cash in circulation in an economy where more than 90 per cent of transactions were cash-based,” the report said. About the recently implemented GST, it said, “The introduction in July 2017 of a single, country-wide sales tax replaced a vast number of different state and local tax rates, and has created short-term uncertainty.”
The report also expressed some concerns over the increasing share of non-performing loans (NPLs) in the banking sector of India. It said it poses further risks. According to the reports, NPLs in India stood at 9.7 per cent in the third quarter of 2017 as compared with 1.7 per cent in China.
“NPLs have increased at an alarming rate in recent years, with the current NPL slippage ratio in India almost double that in FY 2014/15 (IMF 2017b). Public sector banks, with the State Bank of India as a leading example, account for the lion’s share of NPLs in the banking sector,” the report added.
The Reserve Bank of India, however, predicts that gross NPLs will rise to 10.8 per cent in the first quarter of 2018, and to 11. 1 per cent by September 2018.