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measures announced in the Union Budget 2017-2018 for the infrastructure, MSMEs,
low cost agriculture and housing were expected to strengthen the recovery.
Taking into account of all these measures for growth and the baseline
assumptions of a normal monsoon and the budgeted fiscal deficit of 3.2 per cent
of GDP, GVA growth was projected to strengthen 7.4 per cent in 2017-2018. Most
of the agencies lowered the growth rate of India for 2016-17 to between 7.3 to
6.3 per cent after demonetization. For the next assessment year 2017-18 they
have projected between the GDP growth in the range of 6.75 – 7.8 per cent. The former Prime Minister Dr Manmohan Singh in his
article in The Hindu on 9 December 2016 said, the Indian economy is not in a
good shape. Trade numbers are multiyear lows, industrial production is
shrinking and job creation is anaemic. Then he puts forth the prospect of
macroeconomic impact of demonetisation being hazardous. In his speech in Rajya
Sabha he says, the way the scheme has been implemented will hurt agriculture growth,
small industry, informal sector of the economy. And my own feeling is that the
national income that is the GDP, can decline by about 2 percent as a result of
what has been done. (pg. 38). 

Indian economy

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gross domestic product growth of a country has been always desirable and its
steady growth is essential too in case of developing and underdeveloped
countries (Transformation of Indian economy, Preeti Phuskele, 2008. P 4). When
there is a steady growth it speaks of a continuous growth. The economic survey
of 2006-07 has revealed an impressive economic growth, growing at the rate of
9.2%.  Indian economy can be divided as
urban and rural economy. Definitely demonetization will have an enduring impact
on Indian economy, by way of new tax payers, and strengthening financial
inclusion. It brought millions of citizens who have been excluded from the
banking system into the formal economy.


Inflation was at a very
low rate, around 1.7% during 1950s. Inflation increased during 1970s due to
both supply and demand shocks. The supply shock was mainly from oil price and
food price. The sustained rise in fuel price also impacted inflation directly
and indirectly.  

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