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2.5 INDIA
2017/11/26
Reported by Rakesh Kumar, Managing Editor, ISHRAE Journal
 
Economic Environment
 
India’s gross domestic product (GDP) growth in 2016-2017 (April 2016-March 2017) slowed to 7.1% from 7.3% in the previous year, against a forecast of 7.7%. This sudden drop, after more than two years of steady rise, is mainly attributed to demonetization of high value currency notes announced in November 2016, which impacted cash transactions that accounted for almost 80% of financial trans-actions in the country. In the first quarter (April-June 2017) of the current fiscal year, GDP growth dropped further to 5.7% due to the additional impact of teething troubles associated with the introduction of Goods and Services Tax (GST), which subsumes a large number of indirect taxes levied by the central and state governments and local bodies. On October 6, the government announced a number of modifications in the GST regime to reduce paperwork and rationalize tax rates, hoping to boost business sentiment and shore up the economy.
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