The Indian economy faces “serious downside risks” and it’s growth would slow down to 6.7% in 2017 from 7% a year ago, said the United Nations Conference on Trade and Development, in its Trade and Development Report 2017.

The report said that factors such as demonetisation, implementation of the goods and services tax (GST) and corporate deleveraging led to the slow down and made the recovery difficult.

“The informal sector, which still accounts for at least one-third of the country’s GDP (gross domestic product) and more than four-fifths of employment, was badly affected by the government’s ‘demonetisation’ move in November 2016, and it may be further affected by the rollout of the goods and services tax from July 2017,” the report said.

It also pointed to the slowdown in China.

“Even if the current levels of growth in both China and India are sustained, it is unlikely that these countries will serve as growth poles for the global economy in the near future,” the report added.

The report also pointed to rising Non Performing Assets in Indian banks and resulting constraints it will cause on the growth.

“Since debt-financed private investment and consumption was an important driver of growth in India, it is more than likely that the easing of the credit boom would slow GDP growth as well,” it said.

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