GROWTH SLOWS
Centre estimates GDP growth down from 7.6% to 7.1%; note ban effect not factored in
Amid warnings of a cash crunch hitting business activity, government data released on Friday showed that the economy would grow at a slower pace of 7.1 per cent this fiscal, as against 7.6 per cent last year. This was mainly due to the poor showing by manufacturing, mining and construction sectors, and did not factor in the impact of demonetisation.
Despite the estimated fall in GDP growth, India will still be the fastest growing economy in the world.
Most private economists have pared India’s growth forecast to 6.3-6.4 per cent for 2016-17, citing the impact of the government’s scrapping of high-value bank notes last November. Former prime minister Manmohan Singh had pegged the fall in growth due to demonestiation at 2 per cent.
The GDP estimate is a cornerstone of finance minister Arun Jaitley’s Budget on February 1. But the Central Statistics Office said the projection was mostly based on data available by the end of October.
The government data released on Friday showed that the economy would grow at a slower pace of 7.1 per cent this fiscal, as against 7.6 per cent last year.
Chief statistician T.C.A. Anant said, “It is difficult to talk about the impact of demonetisation at this point of time... at this point the drop (in GDP estimates) is not attributable to any policy change (demonetisation).”
Commenting on the data, economic affairs secretary Shaktikanta Das said, “The economic survey and the Budget will spell our what approach the government will take,” he said, adding tax revenues wold exceed Budget estimates this fiscal. Accordingly, the 'First Advance Estimates of National Income, 2016-17' did not reflect the impact of demonetisation, and was based on sectoral data for seven months, till October.
India Inc was pinning its hopes on a growth-oriented Budget to unleash investments and set the pace for economic growth of 8 per cent and above in the near future.
CII said, “No doubt, the demonetisation drive is anticipated to result in a downward bias to GDP growth in the next two quarters, but this is likely to be a blip in the growth momentum as demand has only been deferred and will re-emerge once the situation becomes normal.”
CII said that it looks forward to a growth-oriented Budget which would unleash a new wave of investments and set the pace for economic growth of 8 per cent and above.