While rocked by the successive shock waves of economic policy and reforms, we believe the Indian economy has ended up in a stronger place compared to one year ago.
1. Demonetisation: The major impact of the cash ban was felt in 2017. The poor implementation of demonetisation led to a severe cash crunch in the country. Hit hard by demonetisation, India also lost the tag of the fastest growing major economy in the world in the March quarter with a GDP growth of 6.1 percent. Digital transactions in September-17 rose to the second highest monthly level by value due to cash ban.
2. GST: The much contested Goods and Services Tax (GST) was rolled out on July 1, 2017. India’s economic growth unexpectedly slowed to 5.7 percent in the June quarter, the slowest pace in three years due to the disruptions caused by the rollout of the new tax regime, but is now catching up to pre-GST levels
3. Bank Recapitalisation: In a big move to help the stressed banks, the Finance Ministry announced a Rs 2.11 trillion bank recapitalisation plan in October-2017 for state-owned lenders in a bid to stimulate the flow of credit and boost private investment
4. Ease of Business Index: The next big economic event that took place in 2017 is that India jumped into the 100th place on the World Bank’s ranking of countries by Ease of Doing Business for the first time in its report for 2018. That was up about 30 places.
According to the World Bank, the jump was mainly driven by reforms in access to credit, power supplies and protection of minority investors. The report came after PM Modi eased tax rules for small and medium-sized companies
5. Moodys’ Ratings: In November 2017, Moody’s Investors Service also upgraded India’s sovereign credit rating for the first time in almost 14 years due to continued progress on economic and institutional reforms that are expected to boost the country’s growth potential.