India’s Real GDP Growth to Slow

The pace of India’s real GDP growth is likely to come down to 6.5% in the current financial year on the likely impact of demonetization, while muted inflation might open room for additional rate cuts, a Deutsche Bank report said, PTI reported. Economic growth will see a moderation in the near term and will gradually recover to 7.5% in the next financial year, the global financial services major said. “We expect growth to be impacted adversely in the present and next quarters due to the government’s temporary de-monetization initiative,” said the note, adding that GDP will moderate to 6.5% in 2016-17, and gradually recover to 7.5% in FY 2017-18. According to the report, the government might increase public spending from next year to offset the likely lingering impact of a slower growth in the informal economy. The Reserve Bank of India is also likely to keep monetary policy accommodative for a prolonged period, which will help private consumption to recover once again in the next year, especially in the second half.