India’s growth issues: This is how CEA Arvind Subramanian sees it


India set to regain fastest-growing economy tag in FY19
* 6.75% growth expected in FY18 on GST, bankruptcy code, FDI reforms, export uplift, bank recap
* FY19 growth at 7-7.5% in line with IMF, World Bank forecast

What is helping
* Rural demand recovering
* Export growth re-accelerating to 13.6% in Q3 of FY18
* Non-food credit growth rebounding to 4% in November
* Receding effects of demonetisation & GST
* Services exports and private remittances rebounding

What made growth to slow in H1
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* Demonetisation, teething difficulties in the new GST
* High and rising real interest rates
* Overhang from twin balance sheet challenge
* Sharp falls in certain food prices that impacted farm incomes

What is to be guarded against
* Wait and watch for protectionist tendencies’ impact
* GDP may get hit if global oil prices rise
* Sharp correction in elevated stock prices may stall capital flows
* Higher fiscal deficit and inflation, increase in Fed rates

What should be done in medium-term
* Employment: Finding good jobs for the young and burgeoning workforce, especially women
* Education: Creating an educated and healthy labour force
* Agriculture: Raising farm productivity, strengthening agricultural resilience