With the demonetization dust settling, there are a few observations worth noting
According to the Budget papers, the size of the GDP at the end of 2016-17 will be about Rs 150 lakh crore. One per cent of that will be Rs 1.5 lakh crore. The cost of new notes will be about Rs.42000 crores and the loss of GDP will be around 2% or about Rs.3L crore. India is no longer the world’s fastest growing large economy.
Economic activity is taking a beating. IT WILL TAKE 5 YRS TO GET BACK ABOVE 7% GDP GROWTH SAYS CMIE.“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.”
New Investments fall sharply: New investment proposals have declined sharply since the demonetisation announcement; manufacturing contracted in December, show PMI data
Factory output plunges. Core sector growth declines, which could weaken industrial output. Employment generation in manufacturing companies was negative at -5.2 per cent in 2014-15 compared to 3.2 per cent in 2013-14.Monthly services activity worst since 2008.Cash-intensive sectors hit. Credit growth plunges in key infra sectors: RBI data. The power sector, which accounted for almost 55 per cent of the infra credit demand, saw a contraction of 10.4 per cent in November — down from a decline of 4.8 per cent in April 2016.
Financial distress is a bigger cause of farmer suicides than crop failure.
Bank credit to the infrastructure sector, which had been steadily sliding over the first eight months of the current financial year, has recorded its sharpest contraction of 6.7 per cent in November. Auto sales at 16-year low in December as demonetisation take toll. Economic growth much weaker than what headline numbers show.
India GDP growth rate estimates do not take into account negative impact of demonetisation but do reveal some significant fact. Demonetisation takes toll on investment, manufacturing. Foreign flows hit 2008 lows.
Foreign investors have pulled out a whopping Rs 71,652 crore from Indian markets since November 2016 as demonetisation.
Demonetisation lead to over 30% fall in Smartphone sales in November in top 50 cities: IDC.
Demonetisation impact: ‘Housing sales may see 20-30% decline in 2017.
Axis Bank reports 73% drop in Q3 net profit; fresh slippages at Rs 4,560. Worst is yet to come.