As the world’s largest democracy embarks on a series of dramatic policies expected to transform the entire culture of doing business, its economy is feeling the sting. Ongoing pressure spurred by demonetization and supply chain disruption ahead of July’s Goods and Services Tax (GST) pushed gross domestic product growth to a three-year low in the April-June quarter. Further compounding the situation are sluggish private investment and weak job creation.
At a CNBC panel on Friday, leading Indian business players described those issues as short-term obstacles essential for long-term gain.
“We’re going through the pain, we’ll see whether it takes one or three quarters,” said Sanjiv Bajaj, managing director at Bajaj Finserv, which is a financial services firm part of the larger Bajaj conglomerate. “The impact of the net change will be significantly positive. A year down the line, we’ll be talking with a very positive feel than where we are today.”
Adi Godrej, chairman of The Godrej Group, a corporation with interests in real-estate, household items and chemicals, said he expects GDP to improve as early as the the second half of this year.
“This whole question mark about the Indian economy came from weak June growth,” he explained. “In the manufacturing sector, the new GST rate was less than the combination of earlier excises, so obviously there was a lower destocking of those items and lower clearance, which affected GDP of that month.”
That won’t be the case going forward, he continued, adding that Godrej’s various companies will clock in higher sales in the coming months.