Note ban blues see India slash GDP to 7 per cent

The figures released by CSO project a minimal impact of demonetisation drive on the economy. The BJP would do well to wait for the fourth quarter figures and not rub salt into the demonetisation wounds by celebrating prematurely with the quarter three numbers.

The second advance estimates of National Income, 2016-17, revealed that the growth in the GVA from “manufacturing” sector is estimated to be 7.7 per cent compared to 10.6 per cent in 2015-16.

“We recognise that a combination of good monsoon, pay commission and festival demand had been supportive for consumption demand, but the sharp decline in our rural demand indicate that this data point could be prone to revision in subsequent releases”, Citi economists Samiran Chakraborty and Anurag Jha wrote in a note.

“Growth is projected to slow to 6.6 per cent in financial year 2016-17, and then rebound to 7.2 per cent in financial year 2017-18, due to temporary disruptions, primarily to private consumption, caused by cash shortages”, the International Monetary Fund said.

The economy grew 1.6 percent for all of 2016, its worst performance since 2011, after expanding 2.6 percent in 2015.

The RBI in its sixth-bimonthly policy pegged the GDP growth at 6.9 per cent for the 2016-17.

According to the Central Statistics Office India’s third quarter GDP grew at a faster-than-expected pace despite demonetization.

Agriculture, which accounts for 15% of GDP, is expected to have a strong showing in FY17, with whole-year food grain production estimated at a record high of 272 million tonnes.

Economists polled by Reuters had expected fourth-quarter GDP would be revised up to a 2.1 percent rate. The opposition parties had attacked the Centre’s move saying that it would significantly impact the GDP growth. “The numbers completely negate the kind of negative projections and speculations which were made about the impact of demonetisation”, Economic Affairs Secretary Shaktikanta Das said. Nothing can be deciphered on anecdotal evidence.

Evolution of China’s economic governance will continue to steer the economy on a higher-quality and more sustainable path and help achieve its development goals, including creating a moderately prosperous society in an all-round way by 2020, analysts say.

“The overestimation that was done about the so-called negative impact of demonetisation it is very satisfying to know that it is not there”. The manufacturing sector also showed surprising results, as it grew by 8.3 per cent compared to 6.9 per cent in the previous quarter. Mining also posted a smart recovery from a fall of 1.3% in Q2 to a robust expansion of 7.5% in Q3.

Construction sector growth was lackluster too at 2.7 per cent from 3.2 per cent previous year.

In a statement CSO said, “Agriculture and allied sector growth estimated at 4.4 5 in 2016-17, up from 0.8% last fiscal”.

Net tax receipts in the first 10 months of 2016/17 fiscal year were 8.16 trillion rupees, the data showed. For example, take the growth in private consumption.

When one does this, it gives an impression that the third-quarter GDP number is largely a pleasant statistical surprise and does not quite add up to certain other vital set of information which should ideally corroborate the headline GDP numbers.

In an interview to CNBC, P Chidambaram said: “The GDP numbers have come as a bit of a surprise”.