The official data released on Tuesday reveals that Demonetisation hasn’t impacted the growth of India’s GDP.
New Delhi: The data released on Tuesday shows that Demonetisation hasn’t impacted the Gross domestic product (GDP) growth, the Indian economy performed better than expected at 7 percent in the October- December quarter of 2016.
Still, Gross Domestic Product growth slowed to an annual of 7.0 percent in the December quarter from 7.4 percent pace for July-September period, this is all due to the impact on note ban and the gross value added (GVA) was 6.6%, with the difference illuminated by robust indirect taxes and reining in of subsidies. The GDP of India is larger than China’s 6.8 percent for the last three months of 2016.
Unexpectedly on Thursday, India’s economy retained the title of world’s fastest-growing major economy, despite demonetization.
The CSO or Central Statistics Office has retained the growth projection for the current fiscal at 7.1 per cent and said: “The growth in GDP during 2016-17 is estimated at 7.1 percent as compared to the growth rate of 7.9 percent in 2015-16.”
It also marginally revised upwards the estimation of Gross domestic product for the first and the second quarters to 7.2 per cent and 7.4 per cent.
The records astonished economists, who had expected the economy to take a bigger hit from the government’s announcement to band old 500 rupee and 1,000 rupee banknotes, taking out 86 percent of the currency in circulation effectively overnight.
“Perhaps this data is not capturing the impact of demonetisation,” said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance Co.
“I am totally surprised and stunned to see this number. I believe that, with a lag, we will see an impact on GDP numbers.”
After the ban on old 500 rupee and 1,000 rupee bank notes, many private agencies and government studies estimated that the growth of India’s GDP will be downwards.
Earlier, the first advance estimates of National Income 2016-17 pegged the GDP growth at 7.1 per cent but did not take into account the impact on note ban.
The RBI in its sixth-bimonthly policy pegged the Gross domestic product growth at 6.9 percent for the 2016-17 but in case of Asian Development Bank lowered to 7 percent for the current financial due to the impact of demonetisation.
The National Council of Applied Economic Research (NCAER) expected the economy grow at 6.9 per cent against an earlier projection of 7.6 percent.
Recently, Moody’s Investors Service cut its forecast for India’s GDP growth in 2017 by 40 basis points to 7.1 percent because of the impact of demonetisation.
Shaktikanta Das, Economic Affairs Secretary responded to CSO’s latest projection and said this year growth rate was on a high base of last economic and the records show that demonetisation didn’t make any impact on it.
In this year, GVA or Real Gross Value Added is expected to increase from Rs 104.70 lakh crore in 2015-16 to Rs 111.68 lakh crore in 2016-17. “Anticipated growth of real GVA at basic prices in 2016-17 is 6.7 per cent against 7.8 per cent in 2015-16,” the release said.
The second advance estimates of National Income, 2016-17, revealed that the growth in the GVA from ‘manufacturing’ sector is estimated to be 7.7 per cent compared to 10.6 per cent in 2015-16.
The ‘agriculture, forestry and fishing’ sector is shows the data of 4.4 per cent growth in its GVA in 2016-17, compared to the previous year’s growth of 0.8 per cent.