According to the Centre for Monitoring Indian Economy (CMIE) India’s GDP growth rate for the current financial year is set to slow to 6% due to demonetisation and is expected to remain the same for five consecutive years
“Before the demonetisation shock, the Indian economy was expected to gradually accelerate its real GDP growth rate from 7.5% to over 8% per annum,” Mahesh Vyas, Managing Director at CMIE wrote in an article. “We now expect this growth trajectory to shift down to about 6% per annum for the next five years. The economy is unlikely to achieve a growth of 7% any time during the coming five years.”
Mr.Vyas opined that the removal of 86% of the currency in circulation led to a sharp decline in private consumption expenditure.
He wrote, “The fall in retail inflation to 3.6% in November and the fall in sales reported by several fast-moving consumer goods companies are early indications of the fall in consumption expenditure.”
