April 23, 2019

Government or state banks - who is to blame for India's slowdown?

India, the world's fastest growing large economy, is slowing: 

There has been a visible deceleration in activity in the past six months. It started with slowing sales of autos and some durable goods and has spread from there.

Airline traffic growth is down; companies are now saying sales of consumer staples such as soaps and detergents have begun to weaken, too. Even as the hunt for reasons for the slowdown begins, the main culprit appears to be a familiar one: the still largely government-owned financial system.

The issue is that there isn’t enough money in the economy. For much of the past two years, distributors and retailers of consumer products have been warning of a growing lack of liquidity. At first, policymakers largely dismissed their concerns. The government's late 2016 decision to withdraw most currency from circulation temporarily, and the introduction the following year of a nationwide goods-and-services tax, made it hard to decipher signals on economic momentum.

Read more at https://www.business-standard.com/article/economy-policy/government-or-state-banks-who-is-to-blame-for-india-s-slowdown-119042200067_1.html

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