Is slower growth going to last in India?

India is going through its own tax reform process and economists think this may be one factor behind the economy's slower GDP growth. This has been an ambitious plan to unify the country's nearly 30 states for tax paying purposes. The president wanted to reform the tax system to make it easier including by  implementing a goods and services tax on a nation-wide basis. But there is a real fear that lack of understanding by business people of how the new taxes work will cause investment uncertainty and a general slowdown in business.

Another reason economist think the growth rate has slowed was the ban last fall on most of the country's cash--a move to become a cashless economy. This created havoc as people raced to withdraw cash from banks last year in a panic.

Finally, there were two surprising bans -- on the sale of alcohol within a certain distance of roads and on the sale of cattle for religious reasons.  Even though these bans were removed in August, this may have further slowed the economy because it negatively affected consumption and exports.

Complicating matters even more, the World Bank reportedly said today that India's growth slowed due to preparations for the new tax and this is not a reason to worry because these were "temporary disruptions." The World Bank's leader believes the new tax will actually help India to grow in future. he also said more investment in human resources would help improve economic growth in India.

My own view is that slower GDP growth to 5.7% during the April-June 2017 period, down from 7.9% a year earlier is not really necessarily a terrible growth rate. The US would be very happy with 5.7% growth -- this is relative. How can it be expected that an economy will continue to grow at such a fast rate as 7% for many years? This could even be negative and cause overheating and high inflation.

https://timesofindia.indiatimes.com/india/indias-economic-slowdown-an-aberration-world-bank/articleshow/60960318.cms
http://money.cnn.com/2017/10/04/news/economy/india-economy-modi-slowdown/index.html