Govt’s GDP figures spur new hope
If the Gross Domestic Product estimate for the October-December quarter of 2016-17 is anything to go by, the country may have got over the initial hiccups on demonetisation and may now be set on a revived growth path. That despite the note ban squeeze the GDP rose by 7 per cent during the quarter in which demonetisation happened is indeed an encouraging sign at a time when doomsday forecasters are having a field time predicting the worst. The GDP had risen by 7.4 per cent in the corresponding period in 2015-16 but an initial fall in the immediate aftermath of demonetisation had been expected even by those in the government. While the RBI and the International Monetary Fund had cut growth estimates for 2016-17 by up to one percentage point, some agencies had predicted sub-six per cent rise in GDP in the quarter ending December.
The CSO (Central Statistical Organisation) estimate was that in 2015-16 as a whole the growth rate was 7.9 per cent. That it will not match up to that in 2016-17 is a foregone conclusion. Evidently, it is agriculture and public expenditure that are propping up the growth from dipping further and that will contribute to further revival while the other sectors which have shown a fall in the October-December quarter — mining, manufacturing, power and gas, construction, trade, hotels, financial and real estate—may show a partial revival. Agriculture was a mere 0.8 per cent in 2015-16 but it rose to 4.4 per cent in the current year. The services sector, which rose by 6.9 per cent as per CSO figures, grew by an impressive 11.2 per cent in the current year. However, there are negatives in the form of slower growth of core sectors and the drop in demand generally which need to be watched carefully in coming months and given a fillip.
As Prime Minister Narendra Modi pointed out on Wednesday, while India’s growth projection for the full year (2016-17) is 7.1 per cent, this would be higher than China’s 6.8 per cent growth for the third quarter. India has managed to retain the ‘world’s fastest growing major economy’ title, he added. Whether or not Modi’s boast that demonetisation would spur growth in the long run contrary to what Harvard economists like Dr Amartya Sen have projected is proved true or not only time will tell.