DeMo slowed state’s economy
IMPACT Gross state domestic product shows slight drop this year; government officials attribute it to demonetisation, but say impact was shortterm and economy will be back on track in coming fiscal
CHANDIGARH: Demonetisation has slowed the state’s economy a tad during the current financial year.
The gross state domestic product (GSDP) at constant prices (2011-12), which grew at 5.7% in 2014-15, had registered a high growth of 9% in 2015-16, but has shown a slight drop to 8.7% this year.
While finance minister Capt Abhimanyu did not directly give reasons for the small dip, government officials attribute it to demonetisation. “The impact was short-term. The economy will be back on track in the coming fiscal, they say.
The GSDP growth rate, according to them, is expected to rebound to 9% plus in the coming financial year, riding the robust expansion in services sector.
The finance minister, in his budget speech, said that primary sector (agriculture and allied sectors), which had registered negative growth of 2% in 2014-15, recorded a growth rate of 3.2% in 2015-16. In 2016-17, it is estimated to grow at 7%.
On similar lines, the secondary sector (industry) had shown a growth of 7.7% in 2015-16 as against only 2.3% in 2014-15. In 2016-17, 6.1% is the estimated growth for this sector.
“The tertiary sector (services) had registered a robust impressive growth rate of 10.9% in 2015-16 as compared to 10.3% in 2014-15.
In 2016-17, the growth rate of the sector is expected to be 10.8%,” the minister said.
Capt Abhimanyu said the composition of the gross state value added (GSVA) had shown structural transformation of the state economy towards services sector, calling it a sign of mature and developing economy.
While the share of services sector has increased from 49.6% in 2014-15 to 50.7% in 2015-16 and further to 51.7% in 2016-17, the share of secondary sector remains more or less constant in the range of 30 to 31% during the last three years.
The share of primary sector has shown a corresponding declining trend from 19.3% in 2014-15 to 18.3% in 2015-16 and further to 18.1% in 2016-17.
He said the state government by following prudent fiscal management policies has been able to reverse the increasing trend in deficit parameters witnessed during the previous regime.
“In 2014-15, the revenue deficit, which was 1.90% of GSDP, had declined to 1.60% in 2015-16. In 2016-17, it is likely to be 1.33%.
GSDP, WHICH HAD REGISTERED GROWTH OF 9% IN 201516, HAS SLIGHTLY DROPPED TO 8.7% THIS YEAR
For the fiscal 2017-18, I have targeted to bring it further down to less than 1% and by the end of 2019-20, my target is to bring it down to zero,” he said.
Similarly, fiscal deficit has remained within the stipulated limit of 3% of GSDP prescribed by the 14th Finance Commission for the states.
“In 2015-16, fiscal deficit was 2.92% of GSDP, while in 2016-17, it is expected to be 2.49% of GSDP. It is likely to be in the range of 2.84% of GSDP,” he said.