D&B Economy Observer- October

Recovery depends on the future initiatives by the government

Detailed Commentary

“While the impact of the structural reforms i.e. Demonetisation and GST was very much expected, the quantum was not estimated and hence the current slowdown in the economy is painful. There has been improvement in some parameters in the recent period, and we hope that the rebound in industrial production, especially in capital goods is not just driven by festive led demand and is on a sustainable basis. On the positive side, recovery in exports, moderate interest rate, lower inflation rate, controlled trade deficit, sizable FDI inflows and the government's commitment towards fiscal discipline are likely to pave the way for the economy to recover from the current scenario on a strong note. Moreover, the fundamental consumption story of India remains undented and the revival in the rural economy will provide further boost. It is also expected that the continued reforms aimed at the formalisation and increase in accountability in the economy will help in preventing leakages and flow of resources in the desired direction and provide a strong foundation for a robust and sustainable growth process” said Dr. Arun Singh, Lead Economist Dun & Bradstreet India. We believe that the slowdown has bottomed out, however, the stage and pace of recovery would critically depend on the initiatives that the government takes from now onwards to boost the growth momentum, especially the private sector investment, without which we will not be able to aim for an ambitious growth rate” he added.