Impacts of demonetisation and rollout of the Goods and Services Tax administration on the informal sector and diminishment in the pace of credit creation may influence India's development prospect. Therefore, the Indian Economy is at a slippery slope and hence, India unlikely to serve as a “Growth Pole” for the World in the near future as per the United Nations Conference on Trade and Development-UNCTAD’s Trade & Development report 2017.
The Trade & Development report is a flagship report of the UNCTAD which evaluates the global economic climate.
The report also stated that the growth in the world’s two most populous economies – India and China, remains moderately buoyant, yet the pace is slower and they are at risk of facing some serious risk.
Report about India:
It anticipated that the Indian Economy is slowing down to 6.7% in this year than the 7% a year ago.The Repor further added that the informal sector in India, which still records for 33% of the nation's GDP (total national output) and more than four-fifths of employment, was seriously affected by the "demonetisation" move in November 2016, and it might be additionally affected by the rollout of the GST (Goods & Services Tax) imposed from July 2017.
In this way, regardless of the possibility that the present levels of growth in both China and India are maintained, it is impossible that these nations will fill in as growth poles for the worldwide economy sooner rather than later.
The UNCTAD report 2017 said that increasing NPAs (Non-Performing Asset) of banks are impacting their lending practices.
The Banking sector of India since 2003 has extended credit to the retail segment for housing investment, auto-buys and to the corporate for various projects in infrastructure, is presently troubled with a vast volume of non-performing assets and stressed loans and there are now indications of a lessening in the pace of credit creation.
Report About world economy:
The report which is titled ‘Beyond austerity -towards a global new deal’, additionally pointed out that it was the absence of a strong recuperation in developed nations and instability of global capital flows that have constrained financial growth in developing nations.
It also noted that the world economy in 2017 was picking up however not lifting off. "growth is expected to reach 2.6%, marginally higher than in 2016 however well below the pre-economic crisis average of 3.2%.
UNCTAD is one of the parts of the UN Secretariat. It is a permanent intergovernmental body established by the UNGA (United Nations General Assembly) in 1964. Its headquarters is located in Geneva.
It helps developing countries to access the benefits of a globalized economy more fairly and effectively. It equips them to deal with the potential drawbacks of greater economic integration.