Pointing out the various factors like the recently introduced Goods and Services Tax (GST) as well as protracted issues of corporate and bank balance sheet problems, the United Nations (UN) in its latest report has said that Indian economic growth slowed down in 2017 to 6.6% from 7.1% in 2016, but a gradual recovery is expected and noted that the country is forecast to grow at 7.2% in 2018 and 7.4% in 2019.
UN report also expects revival in private investment as the country’s corporate sector adjusts to GST, infrastructure spending increases and corporate and bank balance sheets improve with government support. Further it said that the government’s reform measures such as new bankruptcy code and the recapitalization package for public sector banks would also support a gradual recovery in private investment ad highlighted that consumption is also strengthened, with faded impacts of note ban.
However, the report also pointed out the issue of rising non-performing assets, saying that bad loans in India have got doubled, and defaults on corporate bonds and syndicated loans have surged in recent years. By mid-2017, distressed bank loans reached a record high of 9.5 trillion rupees ($ 148 billion), but more recent revelations suggest that the actual figure may be higher. In view of this, UN expressed need to address this problem effectively and if it does not happen then India will continue to face weak private investment and modest economic growth.