Uncertain Outlook for the Indian Economy as IMF Slashes India's Growth Forecast

Thu, 19 Jan Pre-Open

   Previous Close   

   09:30 am   

   11:30 am   

   01:30 pm   

   Closing   

India was supposed to be the 'fastest growing major economy' at the start of 2016-17. However, the International Monetary Fund (IMF) has cut its GDP growth forecast for India by a full percentage point to 6.6%.

The important factor for revising GDP growth estimate was demonetisation. On November 8 2016, the government announced the demonetisation of all Rs 500 and Rs 1,000 notes. Since then, its impact has been felt across all sectors of the Indian economy.

Sectors highly reliant on cash transactions ranging from daily consumables, jewelry and real-estate are likely to be the hardest hit. Consumer spending has drastically reduced with people opting to save cash due to uncertainty. Agriculture has been adversely impacted since farmers have been unable to sow Rabi crops due to cash deficiency. All this has led to a snowball effect impacting various sectors of the Indian economy.

The informal sector has been badly affected due to its dependence on cash. The informal sector contributes to 20% of GDP and 80% of employment in India. Lack of access to banking facilities amongst the rural population has further complicated matters. Despite the government's push towards zero balance accounts for the poor, growth of branches has been low. The number of bank branches stands at 7.8 per 100,000 people in rural areas, a marginal increase from 5.3 in 2001.

All eyes will now be on the GST rollout in July 2017. A timely and efficient implementation of the GST will be crucial in cushioning the impact of demonetization. The real benefit of GST comes from a 'level playing field'. A common floor tax across India means that the most efficient producer will win the consumer.

The Union budget of 2017-18 is also eagerly awaited. There are expectations that the government will revamp the income tax structure to improve consumption. Agriculture is expected to get a major boost to compensate for the losses suffered due to the cash crunch.

The different projections from different institutions have added to the confusion about the likely impact of demonetisation. The picture will be clear once the corporate earnings are out for the third quarter of 2017. It will most likely be a precursor to what lies ahead for the Indian economy in the near term.

Keyword: International Monetary Fund, IMF, World bank, RBI, demonetisation, GST, Budget, Agriculture, consumption

Description: After World Bank, IMF revises its estimates for India's GDP growth

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Top Gainers TodayTop Gainers over 1-WeekTop Gainers over 1-MonthTop Gainers over 1-YearTop Gainers over 3-YrsTop Gainers over 5-YrsTop Losers TodayTop Losers over 1-WeekTop Losers over 1-MonthTop Losers over 1-YearTop Losers over 3-YrsTop Losers over 5-YrsOnly BuyersOnly SellersMost Active StocksMost Popular Stocks52 Week High Stocks52 Week Low Stocks

INDICESBSE (Rs 0 to 1)BSE (Rs 1 to 2)BSE (Rs 2 to 4)BSE (Rs 4 to 10)BSE (Rs 10 to 20)BSE (Above Rs 20)BSE - AllBSE-30BSE-100BSE-200BSE-500BSE AutoBSE BankexBSE Capital GoodsBSE Consumer DurablesBSE FMCGBSE HealthcareBSE ITBSE MetalBSE Oil & GasBSE PSUBSE TeckBSE RealtyBSE PowerBSE A GroupBSE B GroupBSE Mid-CapBSE Small-CapBSE Basic MaterialsBSE Consumer DiscretionaryBSE IndustrialsBSE UtilitiesBSE Sensex 50BSE Sensex Next 50BSE Bharat 22BSE 150 MidCapBSE 250 SmallCapBSE 250 LargeMidCapBSE 400 MidSmallCapBSE AllCapBSE LargeCapBSE SmallCap SelectBSE 100 LargeCap TMCBSE InfraBSE ManufacturingBSE CPSEBSE Private BankBSE Diversified FinancialsBSE MomentumBSE Low VolatilityBSE QualityBSE Enhanced ValueBSE Divident StabilityS&P BSE IPOBSE SMEIPOBSE 100 ESGBSE CarbonexBSE GreenexNSE (Rs 0 to 10)NSE (Rs 10 to 20)NSE (Above Rs 20)NSE - AllNSE-50NSE ITNSE Nifty Midcap 50NSE JR. NiftyNSE Bank NiftyNIFTY Next 50NIFTY 100NIFTY 200NIFTY 500NIFTY MidCap 100NIFTY SmallCap 250NIFTY SmallCap 50NIFTY SmallCap 100NIFTY LargeMidCap 250NIFTY MidSmallCap 400NIFTY AutoNIFTY Consumer DurablesNIFTY FinanceNIFTY FMCGNIFTY MediaNIFTY MetalNIFTY PharmaNIFTY Private BankNIFTY PSU BankNIFTY RealtyNIFTY Oil & GasNIFTY SME EmergeNIFTY CommoditiesNIFTY CPSENIFTY EnergyNIFTY India ConsumptionNIFTY InfraNIFTY MNCNIFTY PSENIFTY Serv SectorNIFTY100 Liquid 15NIFTY Midcap Liquid 15NIFTY Midcap 150 Quality 50NIFTY50 Equal WeightNIFTY100 Equal WeightNIFTY100 Low Volatility 30NIFTY100 Alpha 30NIFTY Alpha 50NIFTY Dividend Opportunities 50NIFTY High Beta 50NIFTY Low Volatility 50NIFTY200 Quality 30NIFTY 500 Value 50NIFTY 100 Quality 30SECTORSAgricultureAirlinesAluminiumAsset Management CompaniesAutomobilesAuto AncillariesBanks (Private)Banks (PSU)BankingCementChemicalsDefenceDiagnosticsDronesEngineeringElectric VehicleElectric Vehicle BatteryEnergy SourcesESGEthanolFertilizersFintechFMCGFoodGreen HydrogenHotelsInfrastructureInsuranceInvestment and FinanceInvITIT (Large)IT (Others)LogisticsMediaMetalMiningIndia's Big Tech StocksIndian PharmaMNC PharmaPSUPaintPaperPlasticPowerRating AgenciesReal EstateREITsRenewable EnergyRetailingSemiconductorShippingSteelSugarSupply ChainTelecomTextilesTravel Support Services

10 results 25 results 50 results 100 results All results

Indian Share Market Update: Top Gainers and Losers