Despite demonetisation, India’s GDP growth stays 7 per cent: Govt data

India GDP growth: The Economic Survey for 2016-17 had projected India’s GDP growth rate to reduce by 0.25-0.5 per cent in 2016-17 owing to cash squeeze in the economy following demonetisation.

By: ENS Economic Bureau | New Delhi | Updated: March 1, 2017 9:02 am

 

India GDP, GDP, India GDP growth, India GDP growth rate, india economic growth, GDT growth, GDP india India GDP growth: The numbers released today show that growth decelerated to 7.0 per cent in October-December quarter even as sectoral data reflected minimal impact of demonetisation on account of a sharp rise in agricultural growth and a pickup in manufacturing sector growth.

The economy clocked a faster-than-expected growth of 7 per cent in fiscal third quarter, notwithstanding the demonetisation of high-value banknotes in November and the resultant impact on output and well as consumption. Data released by the Central Statistics Office (CSO) on Tuesday showed that the rate of economic growth in the three months ending December slowed marginally from the 7.4 per cent in the preceding quarter. The Statistics office stuck to its last month’s projection that the economy will grow at 7.1 per cent in the year to March, in line with the advance estimate of GDP growth released in January. GDP growth was pegged at 7.9 per cent in the previous financial year.

The numbers released today show that growth decelerated to 7.0 per cent in October-December quarter even as sectoral data reflected minimal impact of demonetisation on account of a sharp rise in agricultural growth and a pickup in manufacturing sector growth. Nearly all research agencies had forecast that growth estimates for the economy would slide because of the slowdown in consumption due to demonetisation.

The Economic Survey for 2016-17 had projected India’s GDP growth rate to reduce by 0.25-0.5 per cent in 2016-17 owing to cash squeeze in the economy following demonetisation. The Reserve Bank of India (RBI) in its Sixth Bi-monthly Monetary Policy Statement on February 8 had revised downwards GVA growth forecast for 2016-17 to 6.9 per cent from its December estimate of 7.1 per cent. Last week, National Council of Applied Economic Research cut its growth forecast to 6.9 per cent from its earlier estimate of 7.6 per cent.

Analysts noted that since the early estimates of quarterly estimate on gross value addition relied heavily on available data from the formal sector, which is expected to have weathered the note ban better than the informal sector, the first quarterly estimate issued on Tuesday may not fully capture the impact of the note ban.

Subsequent estimates that draw from wider data sources, may well revise the quarterly growth downward, something that was partly corroborated by government officials.

When asked whether the GDP growth numbers factored in the impact of demonetisation, Chief Statistician TCA Anant said, “I can only tell you what third quarter figures show. You may interpret them in whichever way you like…More numbers will come in future and we will update accordingly…am not here to attack or defend “

In a press briefing after the data was released, Anant said that policies like demonetisation are “difficult to assess without lot of data coming in”. The second advance estimates include advance corporate filings and data for full corporate filings will be available only by year-end, he added.When asked that companies in their results have declared a decline in consumption due to demonetisation, Anant said, “There are many items in consumption. Durable goods are only a part of it…other than that, there are other things in consumption like agricultural production and others, which have shown growth and that’s why overall consumption is showing a growth.”

Commenting on the GDP data, Economic Affairs Secretary Shaktikanta Das said this year growth figures are on a high base of last fiscal and numbers “do not show much negative impact of demonetisation”.

Overall, in gross value added (GVA) terms, growth declined to a six-quarter low of 6.6 per cent during the third quarter of this fiscal, from 6.7 per cent during the preceding quarter and 7.0 per cent during the corresponding quarter last year. For 2016-17, GVA growth is seen at 6.7 per cent, down from 7.7 per cent last year. India’s GDP had grown at 7.9 per cent in 2015-16.

Most economists expressed surprise at the numbers. “The rebound in growth in Q4 FY2017 may not be particularly strong. Therefore, GVA growth may still end up being sub-7 per cent in FY2017. Subsequent estimates that draw from wider data sources, may well revise Q3 FY2017 growth downward,” ICRA’s Principal Economist Aditi Nayar said.

Madan Sabnavis, Chief Economist, CARE Ratings said, “The estimates are a pleasant surprise with Q3 growth at 7 per cent and full year growth at 7.1 per cent against our expectation of 5.4 per cent for Q3…the demonetization impact has been negligible and concentrated in few sectors such as construction and real estate.”

For all the latest Business News, download Indian Express App

  1. O
    Onkar Singh
    Mar 1, 2017 at 3:48 am
    Let the govt of India give the Bharat Ratna to those who have dished out this story of 7% growth story!!! They are what Raghuram was to the US who had predicted that a meltdown is coming,and these guys have predicted the economy is growing despite lakhs of people have lost jobs and livelihoods.Its not God who is behind this but the greatest leader India has produced Narendra Modi,who can go on telling you lies but all believe he is the greatest truth teller Jyotish of India!!!!Please take every word he says as the word of God,from 15 lacs ,to 50 days,and everything is fine.Thats what they are claiming!!! And yet the educated economists are not believing the govt.How dare you not believe Modi!!!
    Reply
    1. G
      Gulzar
      Feb 28, 2017 at 9:07 pm
      Allah say Quran is truth
      Reply
      1. G
        Gopi Chand
        Mar 1, 2017 at 3:53 am
        This is a very bad news for P Chidu, MM Sigh and sycophants of most corrupted dynasty in India. They all hoped and pra for a meltdown of Indian economy after demonetization in November 2016
        Reply
        1. U
          Uhh
          Feb 28, 2017 at 5:09 pm
          Criminal Modi at it again.
          Reply
          1. M
            MyTake
            Mar 1, 2017 at 1:49 am
            Great economists gone for hatching more of their talisman "b" eggs!!
            Reply
            1. N
              Nixon Augustin
              Feb 28, 2017 at 11:12 pm
              Another fudged data from Modi.
              Reply
              1. K
                Kumar
                Mar 1, 2017 at 4:34 am
                So it was expected from all Farjiwal's gang that they won't accept any numbers except cheap minister's magic numbers which he obtained from special team of statisticians in his dream. C'mon people grow up and accept the fact...btw did you ever think how Mr. Cheap Minister is getting account details from Swiss Bank ??
                Reply
                1. A
                  ak dev
                  Mar 1, 2017 at 12:11 am
                  It's a tight slap to ex PM, Manmohan Singh and those who predicted a doom after demonetization. Even now after the data is available and GDP figures have published, Modi haters are singing the same doom songs. The arguments presented by them in TV debates are laughable and only proves the intellectual bankruptcy of Modi haters.
                  Reply
                  1. Load More Comments