NEW DELHI—India released economic data on Wednesday that confirmed its place as an outlier in a low-growth world, and Prime Minister Narendra Modi has promised further steps to encourage investment and modernize bureaucracy.
But with his latest step, Mr. Modi has left India’s star looking a lot dimmer, at least for the time being.
Three weeks after his government abruptly canceled India’s largest bank notes to drill out ill-gotten wealth, companies big and small are reeling from the shock to cash sales, large numbers of the poor remain cut off from wages and the new rupee bills aren’t reaching many corners of the country quickly enough.
While government statisticians on Wednesday reported year-to-year GDP growth of 7.3% for the July-through-September quarter, some economists have already cut their growth forecasts for the full fiscal year, which ends in March.
“Currency is like lubricant,” said Rupa Rege Nitsure, chief economist at L&T Finance Holdings. “Until the new currency replaces the old and circulation gets restored to the original levels, some loss of economic activity will definitely happen.”