India’s economic growth rate has seen a dismal run, but a turnaround could be in store much sooner than most expect, according to one of the country’s richest business moguls.
“I expect that GDP growth rate will catch up in the July-September quarter, and it will be very good in the second half of the year,” said Adi Godrej, the chairman of consumer goods conglomerate Godrej Group and reported possessor of a $2.8 billion net-worth.
India’s economy failed to meet expectations for the April-June quarter as gross domestic product growth slowed to 5.7 percent — the country’s lowest pace since early 2014.
However, the slump is likely a one-off result of the new goods and services tax (GST) regime, launched July, the chairman said.
“Because many of the GST rates on manufactured products were lower than the earlier cumulative tax rates, there was destocking as well as lower manufacturing,” Godrej.
“People did not wish to clear goods prior to GST [implementation] and end up paying a higher tax than they would have to [post-reform]. So most of the clearing took place after July 1.”
Some are less optimistic about the country’s economic outlook, however. India’s bad loans problem, ripple effects from its GST reform and last year’s ban on high-value bank notes, could hinder growth for a longer period, analysts have warned.