The government's note ban move clearly had a debilitating impact on India's economy, the industry said today, after Gross Domestic Product (GDP) data showed growth declined to 6.1 percent in the January-March quarter.
India lost the tag of the world's fastest growing major economy to China with a gross domestic product growth of 6.1 percent in the fourth quarter. For the full 2016-17 fiscal, GDP growth stood at a three-year low of 7.1 percent.
"For the sake of jobs, we need to get our act together and get the growth momentum in place. There is a call on the Reserve Bank of India (RBI) to reduce the interest rates and boost confidence. One only hopes that the impact of demonetization has played out and does not spill into the current financial year," Assocham President Sandeep Jajodia said.
FICCI President Pankaj Patel said the fourth quarter numbers point towards moderation which can be attributed to the ban of high denomination currency notes last year.
However, he said the process of demonetization is almost complete and growth impulse is gradually gaining momentum.
Patel said India's economic growth is expected to gather pace in the later part of the current year.
Jajodia said the underlying sentiment needs to improve.
"Even though the economy would have been remonetised, the manufacturing and other critical sectors would need certain sticky issues like inability of the banks and over-leveraged private sector balance sheets out of the way, before we reach a growth push," the Assocham President said.
The government announced the decision to demonetize high denomination currency notes on November 8 last year, banning 86 percent of the country's cash in circulation.
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