Growth to re­cover in June-septem­ber, says NITI Aayog’s Ra­jiv Ku­mar



Aayog’s new vice-chair­man Ra­jiv Ku­mar ex­pects the econ­omy to bounce back to grow 7-7.5% in the Septem­ber quar­ter af­ter it de­cel­er­ated to its low­est level in three years in the June quar­ter.

Data re­leased by the statis­tics depart­ment showed the econ­omy slowed to a growth pace of 5.7% in the first quar­ter (Q1) of 2017-18 from 6.1% in the March quar­ter as com­pa­nies dras­ti­cally re­duced pro­duc­tion ahead of the im­ple­men­ta­tion of the goods and ser­vices tax (GST) start­ing 1 July.

Ku­mar, who took charge on Fri­day af­ter econ­o­mist Arvind Pana­gariya abruptly va­cated the post to go back to teach at Columbia Uni­ver­sity, said at a press con­fer­ence that ac­tive de­stock­ing of goods in an­tic­i­pa­tion of GST roll-out and the base ef­fect of the high man­u­fac­tur­ing growth rate in the April-june pe­riod of 2016-17 contributed to slower growth in the June quar­ter.

Ku­mar has worked in the past as chief ex­ec­u­tive of Delhi-based think tank Indian Coun­cil for Re­search on In­ter­na­tional Eco­nomic Re­la­tions and sec­re­tary gen­eral of in­dus­try lobby group Fed­er­a­tion of Indian Cham­bers of Com­merce and In­dus­try.

“June quar­terly data is only a blip and does not show any trend. In the July-septem­ber quar­ter, growth rate should be at least 7-7.5% as there is clar­ity on GST, re­stock­ing of in­ven­tory by traders is on and mon­soon has been good,” he added.

Ku­mar said it was better for NITI Aayog to put out its own pro­jec­tions through an eco- nomic growth fore­cast­ing unit rather than rely on es­ti­mates by other or­ga­ni­za­tions.

Af­ter the Q1 GDP (gross do­mes­tic prod­uct) es­ti­mate was re­leased, most econ­o­mists said they would re­vise their an­nual growth pro­jec­tion for 2017-18 to around 7%.

Madan Sab­navis, chief econ­o­mist at CARE Rat­ings Ltd, said the rat­ing agency now ex­pects 7.1% growth for 2017-18, down from its ear­lier es­ti­mate of 7.6%.

“Deal­ers will scale back to reg­u­lar stock lev­els, though it will take time. Max­i­mum ac­cel­er­a­tion will be seen in the third quar­ter,” said Sab­navis.

Credit rat­ing agency Crisil Ltd said in a note that in an en­vi­ron­ment of sub­dued global growth and weak in­vest­ments, In­dia’s GDP can­not grow fast in the short run.

“For fis­cal 2018 as a whole, we are in the process of re­vis­ing down our GDP growth fore­cast from 7.4% stated ear­lier. That said, normal mon­soon, softer in­ter­est rates and in­fla­tion, and pent-up de­mand will sup­port con­sump­tion growth in the re­main­ing quar­ters. There will also be a mild push to con­sump­tion from bud­getary an­nounce­ments,” it added.

The sec­ond vol­ume of the Eco­nomic Sur­vey, re­leased last month, said a raft of de­fla­tion­ary im­pulses is weigh­ing on the econ­omy, which is likely to miss the 7.5% up­per band of its fore­cast growth range this year.

The first vol­ume of the Eco­nomic Sur­vey, re­leased in Jan­uary, had pro­jected growth in the range of 6.75-7.5% in 2017-18 against 7.1% in 2016-17.

N.R. Bhanu­murthy, pro­fes­sor at think tank Na­tional In­sti­tute of Public Fi­nance and Pol­icy, said 7-7.5% GDP growth is achiev­able next quar­ter.

“Now we have better clar­ity on GST, one should ex­pect better eco­nomic ac­tiv­ity both in terms of pro­duc­tion as well as con­sump­tion,” he added.

Ku­mar be­lieves that pri­vate sec­tor in­vest­ment is show­ing signs of pick­ing up.

“A large num­ber of ini­tial public of­fer­ings are lined up... Turn­around of cor­po­rate in­vest­ment is al­ready hap­pen­ing,” he said, adding that for­eign di­rect in­vest­ment is ro­bust.

Ku­mar said job creation, in­creas­ing farm­ers’ in­comes and en­abling mi­gra­tion of agri­cul­tural work­ers to more pro­duc­tive seg­ments of the econ­omy will also re­main in NITI Aayog’s fo­cus.

“Jobs should be cre­ated which ful­fil as­pi­ra­tions and more fo­cus should be on the de­mand side rather than supply. Sec­tors like agro-pro­cess­ing, tourism and hos­pi­tal­ity are see­ing higher job creation, apart from tra­di­tional tex­tiles and hand­i­crafts,” he added.


Growth ex­pec­ta­tions: NITI Aayog vice-chair Ra­jiv Ku­mar sees In­dia’s econ­omy grow­ing at 7-7.5% in the June-septem­ber quar­ter.

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