While the common man and the trading community continue to voice concern over ‘imperfect’ implementation of the goods and services tax (GST) and impact of demonetisation, which together have pulled down the economic growth of the country, Niti Aayog vice-chairman Rajiv Kumar has said the economic slowdown that began in 2013-14 has bottomed out and the gross domestic product (GDP) is likely to grow 6.9-7 per cent this financial year (FY18) and 7.5 per cent in FY19.

Most international agencies like the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the country’s central bank – Reserve Bank of India (RBI) – and brokerages have cut their growth forecast for India in their recent economic studies and reports.

The economic growth slowed to 7.1 per cent in 2016-17, the year in which 87 per cent of the currency was demonetised, despite a very good show by the agricultural sector. On a quarterly basis also, the growth in the first quarter of the current financial year has slipped to 5.7 per cent.

“I think by the time you come to the first quarter of 2018, you will see a stronger recovery, and 2018-19 will be the much better year than 2017-18. And that will then continue because it will on much more sustained basis,” he said adding that growth will be about 6.9-7 per cent in the current financial year.

“In the next financial year (FY19), the growth would be about 7.5 per cent,” Kumar said in an interview to PTI.

The Niti Aayog vice-chairman said the country did very well from 2007-13 and the downward cycle started in 2013-14, mainly because of spurge in lending to undeserving projects since 2007.

“The high economic growth between 2007-13 was on the basis of huge increase in loans and spurge in private debt for which there was zero control. That was given by the banking sector to the most undeserving cases (projects) and on completely false assumptions,” he observed.

Noting that growth stalled after 2013 because of policy stance, Kumar said, “As soon as that happened, all the debt began to becoming bad and therefore downward spiral started.”

“My considered view and gut feeling is that, this downward cycle has now bottomed out in July,” he asserted.

While the IMF has lowered India’s growth forecast for the current financial by 0.5 percentage points to 6.7 per cent, the World Bank has pegged economic expansion at 7 per cent, down from 7.2 per cent projected earlier. The ADB too lowered India’s current fiscal growth to 7 per cent from 7.4 per cent, while the RBI cut economic growth forecast to 6.7 per cent from earlier projection of 7.3 per cent.

Meanwhile, IMF chief Christine Lagarde has said the Indian economy is on a “very solid track” in the mid-term, days after the IMF lowered its growth forecast for the current and the next year.

Describing the two major recent reforms in India – demonetisation and goods and services tax (GST) – as a monumental effort, Lagarde said it is hardly surprising that there “is a little bit of a short-term slowdown” as a result.

India's growth rate in 2016 was 7.1 per cent, which saw an upward revision of 0.3 percentage points from its April report. “Turning to India, we have slightly downgraded India; but we believe that India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in India in the last couple of years,” Lagarde said.

“But for the medium term, we see a very solid track ahead for the Indian economy,” she said to a question on India.

“We very much hope that the combination of fiscal, because the deficit has been reduced, inflation has been down significantly, and the structural reforms will actually deliver the jobs that the Indian population, particularly the young Indian people expect in the future,” Lagarde said.