GDP Growth rate precarious

• Economic growth is caused by (1) an increase in aggregate demand and (2) an increase in aggregate supply.
• While the increase in demand is linked to consumption and requires enormous liquidity. Where as supply increase to match increased demand requires investment and easy working capital.
• With stagnant incomes in all classes resulted in demand decrease.
• With stagnant private investment and fragile PSU Banks - working capital for industries is limited and supply side is also restricted. This also restricts exports.
• With no jobs created during past three years economic activity remained stagnant.
• Jobless growth & consumer spending growth are unsustainable beyond a point.
• Infrastructure building remained stagnant.
• Demonetization impacted informal sector sector and agriculture beyond imagination and about 5 million casual jobs evaporated.
• GST roll out resulted in inventory reduction everywhere. Mangled GST badly implemented resulted in confusion and unscrupulous traders are collected higher GST and paying nothing to Government. At least 30% dealers haven't registered with GST but are actively collecting GST and pocketing the same. Cash transactions and GST evasion is on very large scale.
• China recorded average GDP growth of 10.5% during 2003-12 but remained stable at 7.4% thereafter. This despite government's investment of trillions of dollars to enhance growth, which is unsustainable.

Modi & Jaitley should understand that country's economics are complex and there is no single pill to boost GDP growth. Having destroyed racing economy with demonetization and further impacting with mangled GST roll out without adequate preparation impacting economy greatly and GDP growth is limping at 5.7% which otherwise would have been close to 10%. Now Modi & Jaitley are facing dilemma with cash starved treasury and banks, boosting GDP growth is no easy task. With prevailing indicators revival is unlikely prior to 2019 elections.