The Central Statistics Office on Tuesday pegged India’s growth rate at 7 per cent for the current fiscal, 7.3 per cent for fiscal year 2018 and 7.7 per cent for fiscal year 2019. In a statement today, the CSO said, “Agriculutre and allied sector growth estimated at 4.4 per cent in 2016-17, up from 0.8 per cent last fiscal. Advance GDP growth estimate for current fiscal pegged at 7.1 per cent, the same as projected earlier.
Economist at Phillip Capital India, Anjali Verma told Reuters: “It’s a slight positive surprise the fact that they have not revised FY17 numbers downwards. That is clearly showing that it is the financials which have saved the GDP. I think Q4 should be slightly better than the third quarter. It is not going to have any impact in rate cuts because (RBI is) focused on inflation. This will rather boost their argument of shifting from accommodative to neutral.”
WATCH | India’s Q3 GDP Growth Rate At 7% In 2016-17, Demonetisation Impact Factored In
Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Company, said the growth rate is much higher than expectations. “Perhaps this data is not capturing the impact of demonetisation. I am totally surprised and stunned to see this number. This is totally ahead of our expectations and I believe that, with a lag, we will see an impact on GDP numbers,” Srivastava told Reuters.
Earlier in the day, the Reserve Bank of India (RBI) and the Economic Survey had projected India to grow at 6.9 per cent and 6.5 per cent in current fiscal, while the International Monetary Fund (IMF) had estimated it to be 6.6 per cent. Paris-based think tank OECD had today said, “India has been a star performer in gloomy times. We do not have many cases of 7 per cent growth… It is a top reformer among all the G-20 countries.”
Complimenting India for its initiatives towards modernising bankruptcy laws and giving states power to undertake reforms, OECD Secretary-General Angel Gurria told media, “There is no time for complacency. The reform momentum must be maintained,” he said, while suggesting that India should take steps to revise the labour laws, handle banks’ stressed assets and ease stringent product regulations.
Gurria supported India’s move to demonetise high value currency notes. “Demonetisation is a very short term mechanism with a visible effect. India will never be the same again post demonetisation… You are moving towards a much less cash society. This will not affect investment or jobs,” he said. “Demonetisation may have inflicted short term impact on growth, but in long term its effect would include important gains going forward,” he added.