Citing the temporary impact of the rollout of the goods and services tax (GST) regime and demonetization move, Paris-based think tank the Organization for Economic Cooperation and Development (OECD) has trimmed India's Gross Domestic Product (GDP) growth rate forecast by 0.6 percentage point to 6.7 percent for the financial year 2017-18. Earlier in June, it had pegged the country's growth forecast at 7.3 percent for this period. Besides, it has also cut its growth forecast for FY19 to 7.2 percent from 7.7 percent estimated earlier.
The OECD has pointed out that in India, the transitory effects of demonetization and of the implementation of the GST have led to a downward revision in 2017 growth projections, while business investment has remained weak. Over the long term, it noted that the GST is expected to boost investment, productivity and growth. Talking about monetary policy, it stated that there could be room for further cuts in interest rates in India if inflation durably remains around or lower than 4 percent.
With regard to the global economy, the Paris-based economic think tank has said that growth this year is projected to pick up to around 3.5 percent and further rise to 3.7 percent in 2018, higher than in 2016 but still below historical norms. It added that developments in emerging market economies have been more diverse with positive surprises in China and Russia, and a downward revision in India in part due to transitory factors.