the bloom coming off the rose
"The effects of the cash ban were likely to be felt for a few quarters," Erken said by phone from the Netherlands. "The high level of non-performing assets are contributing to subdued private investments."
The data will probably bruise Modi’s administration, which is battling growing perceptions of the futility of its policy after a central bank report on Wednesday showed that demonetization didn’t meet its targets. With private surveys indicating worsening business conditions following the July 1 roll out of a nationwide sales tax, the monetary authority may be pressured to keep interest rates lower for longer even as inflation accelerates.
Modi’s ability to stimulate the economy is limited because figures from the national auditor on Thursday showed the budget deficit touched 92 percent of the full-year target in the first four months of the year started April 1, compared with 74 percent for the same period last year. The outlook for consumption, long considered the main driver of the economy, is also bleak as a survey from Mastercard Inc. published this month shows that Indian consumers are no longer Asia’s most optimistic.
Meanwhile loan growth languishes near a two-decade low as companies staggering under bad debt, with factories operating at less than 75 percent of capacity, await evidence of a pick up in demand before they buy machinery or hire more workers.
Thursday’s data come on the heels of a central bank report late Wednesday, which showed that Indians deposited nearly all the currency bills voided by Modi, dealing a blow to his drive to unearth unaccounted wealth.
Thursday’s data come on the heels of a central bank report late Wednesday, which showed that Indians deposited nearly all the currency bills voided by Modi, dealing a blow to his drive to unearth unaccounted wealth.
The "GDP print, along with yesterday’s underwhelming revelations about the impact of demonetization in wiping out black money, is a double whammy for the Modi government," said Milan Vaishnav, a senior fellow for South Asia at the Carnegie Endowment for International Peace. "This government’s calling card was responsible economic stewardship, but its performance on this front is raising serious doubts."
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