GAZING INTO THE GDP CRYSTAL BALL

Ghosh said if one went by the CSO estimate, growth in the third and fourth quarters would be around 6.1 per cent and 7.8 per cent, respectively, which was impossible, given the extent of the liquidity shock that had led to drastic consumer spending cuts.

As such, the CSO would revise downwards the estimates for 2016-17, perhaps for the first time, Ghosh said.

However, there are views also. Aditi Nayar of Icra said that GDP growth was likely to be 6.5 per cent in the third quarter. While the note ban would selectively affect some sub-sectors of manufacturing and services, the robust kharif harvest was expected to contribute to a turnaround in the performance of agriculture, forestry and fishing, she said. The Central Statistics Office (CSO) has estimated the economy would grow 7.1% in FY17. But, since it did not take into account the impact of note ban, the CSO will come out with the second Advance Estimates and third-quarter GDP figures on February 28 | State Bank of India Chief Economic Advisor Soumya Kanti Ghosh said GDP growth in Q3 would stand at 5.8 per cent, against 7.2 per cent a year ago and growth in Q4 would be 6.4 per cent, against 7.9 per cent a year ago | International Monetary Fund has also scaled down India’s economic growth to 6.6 per cent for 2016-17, from 7.6 per cent estimated earlier

She pegged agriculture and allied sector growth at five per cent in the third quarter, against one per cent contraction in the corresponding quarter of the previous financial year.

“Since the early estimates of quarterly figures would rely heavily on the available data from the formal sector, which is expected to have weathered the note ban better than the informal sector, the first estimates of the third quarter might not fully capture the impact of the note ban. Subsequent estimates that draw from wider data sources might well revise the growth downward,” she added.