Economic Growth Rate: Is Higher rate the Future course?

Economic Growth Rate: Is higher rate the Future course?

Recently, the debates are going on regarding the Economic growth rate. Some has said that economic is doomed where as some are saying that a correction in the economy is going on account of various measures being taken. If the side screaming that economy is doomed is believed, then the question comes into mind that if the economy will rise or will it fall further.

Before going further, here is the history of Growth rate for past 6 years, quarter wise.

If the history is seen, any economy's growth rate appreciated and depreciates in course and never continues to appreciate in a continuum. Further if details are studied it can also be noted that any factor that affects the market (bull market) of the economy also affects the growth rate of the economy. Hence can we use the tools that are used to predict the direction of market be used to predict the direction of growth rate? 

Yes there are various different factors that actually contribute to Growth rate, but if the analogy is seen with the Market due to the relative nature of the two, then so does for the market. But still various statistical tools have been able to predict the movement with a good success. So with the analogy on account of various factors, let us see if the history of Growth rate movement obeys the statistical approach used for the market and if so, what does it say about the future course. There is no conceptual proof of it to work for future, but let me make an attempt to see if it can used and if the future course falls in line, it will only strengthen the argument.

Some of the important tools use for the market to predict the movement are Relative Strength Index and Fibonacci Retracement. Relative strength index concept is a momentum indicator of market. The simple outcome of RSI is that once it goes up, then it should come done, thus dragging the market. Fibonacci retracement is a tools that predicts the various levels of rise or fall as per the Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% or 100%.

Note: Average period for RSI calculation taken 3 Quarters.

Now, if the history of Growth rate is studied, it can be noted that any rise or fall almost follows the Fibonacci retracements. Also if RSI, calculated on three quarter time frame, is seen it seems that the growth rate is also moving in in accordance. Whenever there has been a drop in RSI, there has been a cyclic rise, resulting in rise of growth rate as well. So historically it seems to be following the statistical methods, hence they may follow in future as well.

Now, coming to the future prospects, it can be seen that at current levels RSI for the growth rate stands at 13.6 which is very low. So can be clearly said that there is a very insignificant chance of it falling. For next few quarters, it will only rise, evidently resulting in improvement of the growth rate. Still inn case if there is fall, which is highly unlikely at current RSI, then the fall may be to the levels of 4.35 following the retracement of 23.6%.

Also, if Fibonacci retracements are drawn from the current low at 23.6% then it may jump to 7.05% within 2 or 3 quarters. If the stimulus for growth is strong, like the current PSB recapitalization, then it may rise to 7.9% as well following the 38% retracement or even 8.5% following 50% retracement.

However, any rise of growth rate, beyond 8.5% within next 3 or 4 quarters without a fall in the rate does not seem to be possible statistically as in that case the RSI may touch 85+ which means there has to be a small dip in subsequent quarter before rising as shown above.

So, from above, it can be said that a higher growth is possible statistically but a growth beyond 8.5% is highly unlikely within next 5 quarters, without any small dip. Also, like in the past, let's hope that the levels also respect the statistical tools. Once again, there is no surety that it will work, but if it does then we have a strong argument to use it as a part to predict as well.

Recapitalization of Public Banks: A Renaissance or A Bail Out?

Recapitalization of Public Banks: A Renaissance or A Bail Out?

Before starting, it is important to understand what Recapitalization is. It is a simple measure to alter the financial structure of a firm in order to make it better equipped to face the market and to discipline the business model for doing better business. In the case of our Public Sector Banks, it simply means to empower them to face the NPAs better.

Now coming to the topic, recently Ministry of Finance announced an INR 2.11 Lakh Cr Recapitalization into the public sector banks. Of the given sum, 1.35 Lakh Cr to be issue by Government as Recapitalization Bonds and balance 0.76 Lakh Cr to be raised from budgetary allocations and fundraising from the Market.

The measure was hailed by many, including all the leading banking and financial firms, but few also raised doubts. Such investment is pegged to help the Banks fight their current NPAs and clean their balance sheets which is well taken. However, doubts were raised on the account if government will raise such huge sum of money from external agencies as government has no such provision in their budget leading to huge debt. 

The given contrary arguments actually raise the question if the given step is a renaissance of the PSBs or just a bail out from their current bad loan situation with government getting deeper into debt.

Within one day of the announcement being made, the market rallied with all the major public sector bank share seeing huge demand. Almost all the public sector banks saw a surge by minimum 15%. This resulted in the influx of approx. 1 Lakh Cr as against a target of 0.76 Lakh Cr.

As already aware, during the exercise of demonetization around 15 Lakh Cr. cash was deposited with the banks which they were unable to lend at their previous levels as there was a slowdown in the Industrial output due to fall in demand. It is this same money that Government is now taking from the banks by issuing Recapitalization Bonds to that bank, amounting to 1.35 Lakh Cr. 

The capital generated by issuing recapitalization bonds will be infused into the public banks as equity of government. These bonds will have an additional cost implication of approx. INR 8000 Cr per year (assuming Reverse RR). Also the capital generated will appear as a debt in the books as the budgetary provision for the same has been only INR 18,000 Cr (budgeted in previous budget, lying un-utilized) and thus raising concerns over the Fiscal deficit target of 3%.

The union budget for the financial year 2017-18 was presented in 1st Feb 2017 in which the total revenue collection of the government was estimated as INR 19.11 Lakh Cr. The direct tax component was 9.8 Lakh Crore and the indirect tax component was INR 9.31 Lakh Cr. During the budgetary exercise, the impact of Operation Clean Money (result of Demonetization) and Goods & Services tax might not have been considered as trends and data for both the cases were not clear.

If the Direct Tax collection is analysed now with the current numbers and figures of Tax base, it seems that government may end up with the figure of INR 10+ Lakh Crore as against a projection of INR 9.8 Lakh Crore in the union Budget. ( For Details: Demonetization:impact on direct tax )

In the Union Budget, total collection of Indirect Tax was projected to be INR 9.31 Lakh Cr of which Customs comprised INR 2.45 Lakh Cr, Union Excise Duty comprised INR 4.07 Lakh Cr., Service Tax comprised INR 2.75 lakh cr. and UT taxes comprised 4679 Cr. With implementation of GST, the Excise Duty and Service Tax were abolished and the projected figure for Central GST became 6.82 Lakh Cr. However if current collections figures of average 93,000 Cr per month, which is by only 65% of registered firms, is interpolated for the financial year assuming only 85% of them filing GST for the financial year 2017-18, then the given figure stands at approx. 50,000 Cr more than the budgeted figures of 6.82 Lakh Cr.

It can be clearly stated that the principal of INR 1.35 Lakh crore in the books of government can be written of with 2 to 3 Financial Terms, which is the risk government seems to be taking in order to give a push to the banking reforms. But with above said it seems clear that government may not be able to stick to their Fiscal Deficit target of 3%.

With this having been said, it seems pretty clear that the recapitalization may not just be a bail out attempt of the Public Sector Banks by the Government, by taking the risk of debt on themselves, but an attempt to lead them to fight their NPAs by absorbing the losses on account of the NPAs with government having backup resources to write of the debt. However, with such a huge being invested, it's also now the responsibility of the government to come out with stricter norms of lending to avoid any NPAs in future.

Demonetization: Impact on Direct Tax

Demonetization: Impact on Direct Tax

A lot has been said in the media by many economists and bureaucrats in last few months regarding the adverse impact of Demonetization and Goods & Services Tax on the economy. Many have gone on record to say that the Economy has been destroyed. However IMF defers from it in spite of revising the growth from 7.3% to 6.7% and calling it a blip. Even the global financial service, Morgan Stanley, firm has stayed positive on the economy. These contradicting views still keeps the doubt in mind if the exercise was really good?

From the point of view of direct taxation, the story seems a bit different.

If history of direct taxation is analysed it can be seen that something was not right. The average rate of growth in direct tax collection for past seventeen year was 17%. However, if the same is seen for past 8 years, it was only 10.65% or for past 5 years, it was only 8.74% or for the matter of past 3 years, it was further down to 6.89%.  After demonetization, however, it has gone up drastically to 15.3% for one year, considering the provisional figures as presented in the Union budget. This clearly explains that income tax was not being declared by many, in spite of rising working class and wages in last 17 years.

Further, if one analyses the Direct tax as a component of Total Tax revenue collected as on date, it also shows an irregular trend.

It was on constant rise till 2010, but after that it has been falling in an irregular manner. However, after the exercise of demonetization, it seems to have shed the trend of fall and has started to rise which again points back to the corrupt practices which existed earlier.

If the number of individual taxpayers are seen, than one can easily see that the number is on constant rise. For instance, the number of individual tax payers has gone up from 2.22 Cr to 2.79 Cr, a rise of 25%, as on 7th August 2017 as per the official press release of Central Board of Direct Tax.

The total tax Direct Tax collected in the financial year 2016-17 was INR 8.46 Lakh Cr., in which the rise in the last quarter from its previous one stood at 29.6%, which may be attributed to the exercise of demonetization. Even the provisional figures for the current year's budget stands at INR 9.80 Lakh Cr. If the till date collected figures for the Quarter ending in September 2017 are seen, it stands at INR 3.86 Cr, 18% more than the collection for the same quarter in the previous financial year.

If we interpolate the same as per average growth rate from April 2016 to Dec 2016 (as beyond that, demonetization impacted the collections) on accounting rising number of individual taxpayers and IT Department's 'Operation Clean Money' drive the value goes past INR 9.80 Lakh Cr comfortably.

If we assume the collection as projected, i.e. INR 10.48 Lakh Cr, it is around 70,000 Cr. more than the projected figures by government in the union Budget, which means we can actually expect the government to abolish the Income Tax for people earning up to INR 9,00,000 per year (AY 2014-15 data considered as latest authentic data is unavailable) which may come as a big relief to the people and may also help governing political party in future elections. Also this will increase spending and will give industries a much needed push. Although this is just an interpolation of an assumption, but the possibility cannot be ruled out as well as the exact data regarding the number of tax payers were not clear during the preparation of union budget.

On a holistic view, the exercise does seem to have created some short term jolts to the economy but the long term benefits seem to be much favourable, to the government in terms of revenue which can be spent on various social schemes and if the trend continues, to the middle class population as well if government relaxes the limit of the taxable income by certain amount.

The Science of Foreign Debt Loans

The Science of Foreign Debt Loans

In last few years, we are hearing a lot about foreign investments in our Country. From Manufacturing to Infrastructure, from Government to Non-government sectors, all the sectors are at some point taking loans from different foreign entities. As charted below, it can be seen that the debt figures are growing at an average rate of 7.30% year on year.

Any government that comes to power always announces any form of such investment by any external agency proudly, with a lot of pomp and show. With the figure currently standing at around 19% of our Gross Development Product, it becomes important to understand, drill down and see if it will have positive or negative impact on us.

Most of the loans taken by India are either for Government Loans or Non-government Loans. Most of these loans are in form of Commercial Borrowings, Non- Resident Indian Deposits, International Monetary Fund Loans, Bilateral or Multilateral borrowings, etc.

Most of the Non-government borrowings are by private corporate entities who avail it for their business expansion. However, the case with Government borrowing is different, as it is required for various social & economic development projects which have very low revenue generation capabilities. As a result, viability of the borrowings, the repayment of the debt and entity from which the loan is taken becomes a critical issue, which if not taken care may have adverse effects.

Now coming to the Government loans, most of the loans in our country is from World Bank, Asian Development, European Institutes or Japanese Institutes. Globally even China is known to be major investor. A basic in-depth analysis of their economic status, term-loan policies and central bank rates reveals the purpose of giving loans. While World Bank & Asian Development Bank were created to help poor countries reduce poverty, foster economic growth and cooperation, the same doesn't seem to be the case with other Institutions from Japan, Europe or China as they claim. Their purpose of giving loans seems to be something else as seen from the given chart trends.

As it can be seen in European nations, Japan or US, the Long term borrowing rates seen to be reducing. If the same is rate assumed and interpolated for next decade, it can be easily said to go negative. Which means that banks will start charging interest even for the deposits, which is not good for any growing economy. Hence these countries are giving long-term loans at interest rates ranging from 0.1% to 2.5% as it will ensure their money value at least remains static and they continue to grow, even if marginally. So giving such loans are their need as well.

Even the trends of central bank rate strengthen the fact that for most of the European nations and Japan, giving infrastructure loans are their need. This serves the interest of both the entities involved i.e the institution giving the loan and the entity receiving it. However the interest rates of loans extended by China, varying from 2% to 4% (link 1 ,link 2), seems different as it is well below their own Central bank rate. In this case, mutual interest doesn't seem to be the prime motive. This when seen in line with Tajikistan (ceding land china on account of non-repayment), Sri Lanka (Mattala Rajpakasa International Airport being declared world's emptiest airport and unable to generate revenue) and Cambodia (almost 80% of its total debt owed to China) cases rings the bell. It seems more of like a debt trap than a development loan.

The risk any term loan carries is the risk on account of Forex rate. Most of the term loans availed by the borrowers are either in Dollars, Euros or other global currencies and not in their local currencies. Which means due to varying exchange rates, an additional risk on account of Exchange rate becomes a major factor. The extent of impact may even overshadow the lower interest rates by the lender and needs to be checked on timely basis.

Keeping this mind, whenever any government announces any loan with pomp and show, one should study the different aspects and conditions as mentioned and then make any pronouncement regarding the loan/investment availed as growth is good only if sustainable. Not doing so may expose to the risk of falling into the unending debt trap as seen in many cases.

Hyperloop: Welcome to the Travel of Future

Hyperloop: Welcome the Travel of Future 

All the talks about travel of future began when Mr Elon Musk shared a white paper on Hyperloop Alpha (Link) in August 2013. In the white paper, Mr Musk talked about developing a 350 miles (563 Km) long tube from Los Angeles to San Francisco with a special environment inside, in which the Capsules (or Pods, what he calls those vehicles) will travel at an almost sonic speed of one Mach i.e. 760Mph or 1220Kmph. This Hyperloop will reduce the travel time from 6 hours by Motorcars or 1.5 hours by Air planes to mere 30 minutes. Further the cost of travel will reduce from a $100 (INR 6500) by Aeroplane to mere $20 (INR 1300). This proposed concept took the Transportation industry across the globe by storm. Within next one year, many start-up firms emerged (including Hyperloop One, Hyperloop Transportation Technologies, Arrivo, etc.) around the proposed concept, taking up the charge to build the travel of future into reality.

In September 2017, the Andhra Pradesh Government junked the tried and tested Metro project in Vijayawada and signed up an MoU (Memorandum of Understanding) with Hyperloop Transportation Technologies for introducing the futuristic Hyperloop in the capital city Amrawati. The proposed Hyperloop will connect the city of Vijayawada and Amrawati and will cover the distance of 25 Kms between them in just 5 minutes. The feasibility studies are expected to begin from October 2017, however the cost of the project is yet to be disclosed. On 22 September 2017, as per Denver Post, the Transportation department of Colorado also has agreed to develop a Hyperloop connecting Cheyenne, Denver & Pueblo with Vail. The project is expected to cost $24 Billion (INR 1.56 Lakh Cr.) extending for a length of 360 Miles (576 Kms). With the physical, economical and commercial viability of Hyperloop yet to be proven, the question rises that will the Hyperloop be an instant reality or transport of Future.

In his whitepaper, Elon Musk charted out the whole plan at a cost of $6 Billion for Hyperloop capable of moving around 15 Million people per year between Los Angeles & San Francisco at a speed of 760 Mph. This when amortized for 20 years, gives an approximate ticket price of $20 (INR 1300). However, as per the current trends as seen in the recently proposed project in Colorado, the project seems to be costing $24 Billion for almost the same length, which makes the Ticket price at almost 80$ (INR 5200).  This is almost four times what Musk arrived. Also, as per Arabian Business, the Hyperloop from Abu Dhabi to Dubai, having a length of 93 Miles, has a whooping cost of $5 Billion which is similar in lines with the Colorado Project.

Most recently, even Sir Richard Branson announced that a deal has been struck with the Government of Maharashtra for construction of Hyperloop route linking Mumbai to Pune, a distance of 150 Kms (93 Miles) which will reduce the time of travel from 3 Hours to just under 25 minutes. It will have a capacity of 150 Million passenger trips per year and will be completed in a time frame of approx. 6 to 7 years. However no official announcement was made towards the cost of the project but it was stated that it will be well in range of airfare. If a simple interpolation of cost is done in line with the Colorado Project or with Abu Dhabi to Dubai route it can be said that the given project may cost approx. $5 Billion or INR 33 Thousand Cr. However if its capacity is taken as per the white paper, then 150 Million capacity sounds highly exaggerated. Even if the capacity is considered, which was 15 Million for 350 Miles at a speed of 760 Mph in white paper, it will be very less in the case as due to lesser speed and distance, the continuum of pods travelling at a gap of 10 minutes will be lesser as compared to the conditions in white paper, say around 8-10 Million at max. And if this capacity is amortized for 20 years with an 80% capacity, the price per head arrives to be approx. INR 2000-2500 with various cost of O&M or capital not considered. Seeing these trends, it can clearly be said that what Musk proposed may be technologically viable, but financially it is going to be almost double the cost of High Speed Rail considering all the cost of finances.

Many startups have come up and started to test the idea of a low pressure tube with capsules supported on air cushion being accelerated or decelerated by magnetic linear accelerators. Hyperloop One seems to have been in the fore front as on date. They have carried out three test as on date, as listed. The first one on 12th May 2017, the second one on 2nd August 2017, and the third one on 15th Dec 2017, all at Nevada desert.

From the tests conducted by Hyperloop One, it can be seen that they have successfully carried out test running only few meters and have achieved a maximum speed of 240 Mph approx. Even the Pod designed by SpaceX has been tested only up to 220 Mph. But the required speed of the proposed project is 760 Mph and no test has been able to achieve any nearby speed as on date. Further, the low pressure tube has only been tested up to 437 meters. Tube with low pressure running for miles with turns and gradients are yet to be tested and established as safe. Even the case of leak in air pressure in the tube and its effects needs to be tested. Also as claimed, effect of earthquake, temperature, thermal expansion or other adverse situations are yet to be tested and established. And the list of so many ‘things to be done’ goes on.

As much I want it to be a success, but the available trends on project execution and with so many tests/hypothesis yet to be proven, it seems it is too early to say that the Hyperloop mode of transportation is the new thing and ready to be vetted against High Speed Rail mode of transport. However, with the current questions if answered, it can revolutionize the industry. And still, as it seems now, is just a Travel of Future.

(updated 01-03-2018, Mumbai - Pune details added)

High Speed Rail: Is the deal sweet enough?

High Speed Rail: Is the deal sweet enough?

On 14th of September, Prime Minister Shinzo Abe visited India and along with Prime Minister Narendra Modi he laid the foundation stone for the first High Speed Rail network in India which will connect Ahmadabad to Mumbai. The project is going to be 508 KM long which will be mostly elevated except for the stretch extending from Thane to Virar, which will be underground. The estimated Cost of Project is INR 1.08 Lakh Crore, of which 81% will be given as a loan by Japanese International Cooperation Agency (JICA) at an interest rate of 0.1% with a moratorium period of 15 years, which amounts to INR 0.88 Lakh crore (1.50 Lakh Crore Japanese Yen ) per year. During his inauguration speech, Prime Minster Modi bragged about this low interest rate.

In last few days, a lot has been written about the project, raising questions on its viability and finances. The claims raised needs to be verified so that Ahmadabad-Mumbai High Speed Rail doesn't end up burning a hole in Government's pocket like Kochi Metro. In order to analyze the claims, a basis drill down is needed.

Japanese International Cooperation Agency has given the loan at a mere rate of 0.1%, which when calculated on the total loan value, comes around INR 88 Crores per year. This lending rate when compared with the Lending rates of China or France seems to be too low. The Agence Francaise de Developpement has given loans for Kochi Metro at rates varying from 1.4% to 1.9% per year. Even China gives billion dollar loans to Sri Lanka & Pakistan at rates varying from 1.6% to 6.5% per year. However, the major factor in lending rates from Japan is that the loan is given in Japanese Yen and not in Indian Rupee which makes it prone to Forex Fluctuation. This means that the repayment of Loan is to be done in Japanese Yen. An analysis of Exchange Rate of Yen-Rupee with past data suggests that Yen might rise for next year as the GDP rate of India is falling and GDP rate of Japan may rise. However in a longer term, Indian GDP will catch up to its previous level and the exchange rate may settle at lower than current levels once the repayment starts.

Fig: In the given comparison, it can be seen that Exchange Rate (Yen-INR) is a function of Relative GDP growth of Japan & India. In the current scenario, Exchange Rate is rising because of fall in GDP of India. However, within 3 quarters, Indian GDP is expected to growth to earlier levels, bringing the Exchange Rate down.

In 2014, World Bank had published a report on Construction Cost of High Speed Rail across the globe. It had also appreciated the comparatively low construction cost of High Speed Rail in China. This raises a question why was competitive bidding for the Ahmedabad-Mumbai project was not done. Cost of High Speed Rail in various countries as per the World Bank report are as follows:

It can be seen that had there been a competitive bidding, the construction cost of Bullet could have been saved by substantial amount. But the point to be noted here is that if, at the same price, anyone would have shared the technology with India along with a substantial amount of loan at a meagre rate of 0.1%. Even if the lowest bidder, China in this case, would have won the contract, what could have been its term for execution. Could they have been trusted, keeping in view the recently concluded Doklam Standoff and various statements made against India around it. We should not forget here that Japan has committed to utilize the local expertise and manufacture the components locally which may generate 1 lakh jobs, which is not the case with China as seen in China-Pakistan Economic Corridor. 

In the Mumbai-Ahmadabad corridor, there are 25 One-way daily flights, around 67 Trains One-way trains and around 80 One-way Buses with a capacity of moving around 70000 people. Considering both the ways, around 140000 people move between the cities to and fro, not considering the fact that people travel between the intermittent cities lying in route as well. A back work of the initial investment of 1.1 Lakh Cr. with a contingency of 10% (on account of Escalation & overshooting of construction Cost, if any), 0.1% interest on principle amount & an operation cost of 500 Cr. per year for a repayment period of 35 years (which is usually taken for most Mass Rapid Transit System) suggest that on a per day basis around 43500 persons should travel with an average tariff of INR 3000. So there seems to be a huge potential.

Bullet has been planned to have around 35 trips per day in each direction with a capacity of 750 persons per trip, which in future may be increased to 50 trips per day in each direction. Assuming an average fare of INR 3000 with an occupancy of 75% on the Total of investment and interest payable gives out a repayment period of around 26 years without considering any increment in the tariff or number of trips progressively, which is good as compared to other Mass Rapid Transit System Projects done in the country.

Further to above, if a basic analysis is done with an assumption of completion of project within budget, operational cost of 350 Cr. to 500 Cr. per year, initial occupancy of 75% and increase in revenue from Fare Box collection alone at a rate of 5% per year for 50 years, it suggests that it may give an Internal Rate of Return of 7.6% without considering a moratorium of 15 years and if moratorium is considered then an Internal Rate of Return of 8.2% can be expected. Also, if a Net Present Value analysis is done at a discount rate of 6% then the analysis, without considering moratorium for 50 years, gives a value of 0.116 Lakh Crore and a value around 0.21 Lakh Crore with moratorium period of 15 years, which is good.

Keeping in view all the above, it can as of now be said that yes, Mr Modi has all the reasons to brag about. However a close eye in the project is needed from top level of government as even a small deviation from the projected plan may change the course resulting in an eyesore as a very large sum of money is involved.

Demonetization: Was it all Worth?

Demonetization: Was it all Worth?

Woke up, Took bath, dressed up and hopped on to my bike. I was getting late to office. As usual, there was a lot of traffic that day and was stuck in a Traffic Signal. Saw people flocking around the ATM near that signal. Never had seen that many around that ATM. Some thing was going around it the area it seemed. As a regular daily office goer, I didn't care much and continued on my way to home.

Almost ten months, three quarters (and a fourth one just to get over) later I wonder was all that chaos all that worth. The question still remains unanswered. In Quarter 3 of FY 2016-17, the GDP managed to still grow at the rate of 7.3%. Even it Quarter 4 of FY 2016-17, the GDP grew by 7%, all thanx to backlogs & stocks piled up and the attitude of firms to show maximum sales in the last quarter to end the Financial Year on a 'good note' (of course everybody knows, its for showing maximum profits to show a growth to the Shareholders). However, the Quarter 1 of FY 2017-18 saw a growth of 5.7%, so finally demonetization showed up in the economics of India.

Further, as we are closing in for September ending Quarter, no good news has come up. The Index of Industrial Production, which was at 2.7% in March 2017 ending quarter, has come down to 1.2% sharply, as less cash has forced the production to go down, The only saving grace in it being the excessive sales by the Industries on account of Goods & Services Tax implementation.

Also, In case of Agricultural sector, the growth rate for quarter ending in June 2017 was 2.3%, around 2% lesser than the the same in September 2016 ending quarter. In spite of 96% of average rain, the sowing this season has been hesitant. Government had predicted a 2% growth in September 2017 ending quarter, but it seems to be very unlikely to achieve with lower Kharif sowing and all the prices of pulses & onion coming down.

In case of construction sector, the economics seems to be improving. The sector has started to grow at 2% in quarter ending in June 2017, as against the (-)3.7% growth in March 2017 ending quarter. The only saving grace for this quarter may be in terms of Government Spending, which has climbed up to almost 10%, 9.5% to be exact.

With all the above factors being kept in mind, its very highly likely that GDP will grow at a rate of 5.5%-6% range in the September 2017 ending quarter.

So, with two quarter's GDP growth at 5% to 6% levels and with almost all the money getting back to the economy after demonetization, the question still remains that If it was worth taking.