GDP growth expected to soar to 7-7.5 per cent in Q2: Niti Aayog vice-chairman Rajiv Kumar

Niti Aayog Vice-Chairman Rajiv Kumar

Newly-appointed Niti Aayog Vice-Chairman Rajiv Kumar on Friday sought to allay fears surrounding India’s dwindling GDP, expressing that the country’s economic growth is expected to soar to 7-7.5 per cent in the second quarter (July-September) of 2017-18 on account of good monsoon and clarity over Goods and Services Tax (GST). “I am confident that in the July-September quarter, economy will grow by 7-7.5 per cent. Destocking, which was in anticipation of GST rollout has completed and now, there is more clarity on the new tax regime,” said Kumar, who took charge as Vice-Chairman replacing Arvind Panagariya.

“Also, monsoon is good. Many IPOs are in the offing. FDI and FIIs are also increasing,” the noted economist pointed out. His comments came after the economic growth slumped to a three-year low of 5.7 per cent in the first quarter due to disruptions caused by demonetisation as well as the slowdown in manufacturing activities.

Kumar also acknowledged that the note-ban had impacted the growth rate in the first quarter, adding that the currency shortage triggered by the scrapping of Rs 500 and Rs 1,000 notes on November 9 last year was over.

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Responding to former prime minister Manmohan Singh’s statement that demonetisation would shave off economic growth by about 2 per cent, Kumar said quarterly data cannot be used to make such conclusions. “With due respect to my mentor Manmohan Singh, this quarterly data cannot be used to say look GDP will drop by 1 -2.5 per cent… There has been successive drop in GDP growth,” he said. “There is a historical experience, every country which has taken fundamental governance reform has seen shrinkage in output.”

With PTI inputs