CRISIL has trimmed its fiscal 2018 growth forecast for India by 40 basis points to 7 per cent from 7.4 per cent earlier, after data for the first quarter showed GDP growth at 5.7 per cent, the slowest in the past three years.
The demonetisation-driven cash crunch hurt economic growth, especially small enterprises, while the imminent rollout of the Goods and Services Tax (GST) spurred destocking and a slowing of production brought down manufacturing growth.
The 7 per cent growth forecast implies a GDP growth of 7.4 per cent on average in the remaining three quarters.
CRISIL believes that the sharp decline in growth in the first quarter is transitory and the economy will grind up slowly over the next few quarters as the impact of demonetisation and destocking fades. The Purchasing Manager’s Index (PMI) for August already signals a pick-up in manufacturing activity.
The growth will continue to be consumption-led, given