India’s growth slowed due to structural reforms: US

India’s growth has slowed due to structural economic reforms like demonetisation and the rising share of non-performing loans (NPLs) in its banks is worrisome, says the Economic Report of the US President released recently. 

NPLs have alarmingly increased in recent years, with the current NPL slippage ratio in India almost double that in 2014-15, it says.

The introduction goods and services tax has created ‘short-term uncertainty’ and India’s public sector banks, led by the State Bank of India, account for the lion’s share of NPLs in the banking sector, which poses further risks, according to a news agency that cited the report.

US bilateral trade deficit with four major countries, including India, narrowed in the first three quarters of 2017 compared to the previous year, the report says.

According to statistics provided to the International Monetary Fund (IMF) by India, NPLs as a share of all loans — the NPL slippage ratio —stood at 9.7 per cent in the third quarter of 2017, compared with 1.7 per cent in China.

Indian banking sector’s stress, however, may be ameliorated in the future, as the government recently announced a $32.4-billion package to recapitalise publicly sector banks, the report said.

Observing India to be the most frequent user of anti-dumping measures, the White House report said delays in the approval of agricultural products derived from biotechnology in China, the European Union, India and other countries result in increased market uncertainty among technology providers, farmers, and traders of US corn, soy, cotton, and alfalfa, leading to reduced exports of these products.

The US Government also blamed India for not implementing the WTO ruling on poultry.