Cash ban: India Q3 growth slips to 7%
new delhi — India’s economic growth rate slipped to seven per cent in the third quarter of the financial year after the controversial ban on high-value banknotes in November, official figures showed on Tuesday.
Gross domestic product in one of the world’s fastest-growing economies expanded seven per cent year-on-year in the three months to the end of December, down from 7.3 per cent in the previous quarter, data published by the central statistics office showed.
While growth came in lower than the previous quarter, it exceeded most analyst predictions in the wake of the government’s shock move to remove all ₹500 (around $7.50) and ₹1,000 notes from circulation immediately.
Prime Minister Narendra Modi has defended his so-called demonetisation scheme as a necessary strike against corruption and a way of boosting tax revenues by dissuading people from doing business in cash.
But the move triggered massive lines outside banks as authorities struggled to print replacement notes fast enough.
Chief statistician T.C.A Anant said after the data was announced that it was difficult to assess the full impact of demonetisation, which the government had already acknowledged has hit growth.
“Policies like demonetisation are very difficult to assess without a lot of data,” Anant told a Press conference. “We will keep evaluating the numbers. I will not like to draw any conclusions at this stage.”
Anant said some sectors such as agriculture and mining had in fact performed better than expected in the third quarter. “The only two sectors in which it is distinctly worse is finance and the real estate category,” he added.
The impact on the real estate sector was widely expected as experts say most transactions are either wholly or partly conducted in cash in a bid to avoid paying tax. Analysts said the data was better
We were expecting 6.5 per cent and the actual growth at seven per cent is a pleasant surprise Sunil Sinha, principal economist at India Ratings & Research
than expected. “It’s higher than our expectation. We were expecting 6.5 per cent and the actual growth at seven per cent is a pleasant surprise,” Sunil Sinha, principal economist at India Ratings & Research, told AFP.
“But when I look at third quarter more carefully, half the quarter, including the festive season when spending is high, was gone by the time demonetisation kicked in,” he said in reference to Diwali.
“Wait and see what happens in the fourth quarter. That’ll be a better parameter to judge the impact of demonetisation.”
Ashutosh Datar, an economist at IIFL Institutional Equities, also cautioned that the full picture had yet to emerge. “There will be a downward revision of this as more data comes in over the next few quarters,” he told AFP.
new delhi — Hyperloop Technologies, which is building a super-fast transportation solution based on an idea by billionaire Elon Musk, is in initial talks with the Indian government and companies to partially build and operate the vehicle on some routes, its chief executive officer said.
The Los Angeles-based company, known as Hyperloop One, will decide by end of this year whether it’s feasible to run the vehicle in India after studying the market, Rob Lloyd said in New Delhi. The company will locally source a significant part of the components, including steel, if it decides to move ahead with the plan.
“India turns out to be a massive opportunity obviously for the concept of Hyperloop, which is why there’s so much interest,” said Lloyd, who’s in the country for discussions with the government. “We want to align the stakeholders to actually find a route that makes sense, to do the detailed engineering, do the work on financing that route, think about a public-private partnership.”
India, with the world’s secondbiggest population and seventh biggest land mass, is struggling to match infrastructure growth with rapid urbanisation. Prime Minister Narendra Modi plans to spend a record 3.96 trillion rupees ($59 billion) to build and modernise its railways, airports and roads, as the country seeks to improve its facilities to attract companies to invest in the country.
Hyperloop is working on technology that would use magnetic levitation in low-pressure tubes to transport people and goods at airplane-like speeds.
“The market itself makes a lot of sense,” Lloyd said. “Our analysis says that between Middle East, India and parts of the US, with a renewed focus on infrastructure, those are logically places where it could happen.”