The Indian agriculture sector, which is the largest informal sector of the Indian economy, is the main driver, followed by others such as services and manufacturing that got spooked by the demonetisation drive. The sudden decline in money supply has adversely impacted consumption demand in the economy. However, one should look at the bigger picture of demonetisation, which will definitely fetch results in the long term.
It is largely expected that the Modi government would continue to follow sound and prudent economic policies to support growth. The government would not want to lose India’s ‘bright spot’ tag among its peer group. Undoubtedly, post demonetisation, the forthcoming Union budget, which is scheduled for February 1, would be a litmus test for the government. Expectations are running high and have created a buzz among all the stakeholders.
It is largely expected that the Finance Minister would announce a string of steps in the Union Budget 2017 to minimise the pain of demonetisation. This year the budget will also be crucial, given the elections in five states, including Uttar Pradesh.
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