Fall in GDP figures structural, not transient, says SBI report: |ForumIAS

ForumIAS LATEST

1. 1. SFG FRC 2027 | Program starts from 18th Dec. 2026 | Admissions open for Entrance Test Click Here to know more →
  2. Prelims Test Series (PTS) for Prelims 2027 starts 11th Oct. 2026 Click Here to know more →
  3. [Pre-order] Ethics Redbook 3rd Edition: Delivery starts from 10th October onwards Click Here to Read More →
  4. 21 Sept. | GS Advance Program (GSAP) for UPSC 2027 Mains starts from 11th Oct. Click Here to Read More →

Context

India’s falling GDP in the first quarter of the current fiscal shows underscores the problem as more structural than momentary

Is Goods and Sales Tax the reason for the present fall in GDP?

There has been a lot of talks concerning the manufacturing destocking ahead of GST :

India’s economic growth slipped to a three-year low of 5.7% cent in April-June, underlining the uncertainty related to the GST
A significant destocking in both consumer as well as investment intensive sectors was already taking pace in 2016-17

What is being done by the Government?

The government may cut expenditure to meet the 3.2% target with fiscal deficit touching 92.4% of the budget estimate by the end of July
In absolute terms, fiscal deficit — the difference between expenditure and revenue — was Rs. 5.04 trillion of budget estimate till July, against 73.7% in the same period last fiscal.
However, with uncertainties involving GST, it would not be prudent for the government to reduce spending as other growth catalysts are missing.