The 6.5% warning

Almost all steps in the strategy to revive investment are likely to be slow and painful. There are no shortcuts

Written by Ila Patnaik | Published: January 11, 2018 12:02 am

GDP, India's GDP, GDP forecast, investment in indian economy, Investment, India economy, Indian express column

Investment in the Indian economy has declined from 34.3 per cent of the GDP in 2011-12 to 27 per cent of the GDP in 2016-17.

The GDP forecast for FY 2018 of 6.5 per cent does not come as a surprise. The introduction of a Goods and Services Tax, even in its cleanest and simplest form, would have inevitably led to disruption in any economy. In India’s case, multiple rates and a complex structure have made compliance cumbersome and created gaps in the supply chains. As the government simplifies the GST regime in response to the difficulties being faced on the ground, this problem will likely get solved. The bigger challenges for the economy are the problems that have just begun to be solved.