Slowing GDP growth will have 'far-reaching' consequences: Kaushik Basu

Distress visible in the agriculture sector, says former chief economic advisor Kaushik Basu.

There will be "far-reaching " consequences of India's GDP growth slowing down because of distress in some sectors, said former chief economic advisor Kaushik Basu on Monday.

"This (sectoral distress) has resulted in a decrease in job creation and it is a cause for concern," said Basu, who was honoured with a Doctor of Literature (honoris causa) degree at the convocation of Jadavpur University in Kolkata.

Basu, a former World Bank chief economist, said distress has been "very much visible in the agriculture sector" as the "condition of farmers is bad".

The country's economy grew at 7.1 per cent in July-September, the lowest in three quarters, according to the latest government data.

Stating that the slowdown may continue for six months to one year and its consequences could be "far reaching", Basu said the government needs to pay attention to the condition of people in villages.

Basu said the agriculture is still feeling the effects of demonetisation, Prime Minister Narendra Modi shock decision November 2106 to outlaw high-denomination currency notes to target undeclared “black money” and fight corruption.

"Many farmers who had resorted to heavy borrowings in the December 2016-January 2017 period could not tide over the situation as yet. The distress in the agri sector is very much there," the economist said.

Basu said farm loan waivers were needed because of India’s "special circumstances".