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Indian economy’s growth estimated at 7.1% in 2016-17: Government

New Delhi, Jan 6 : The Indian economy is expected to grow at 7.1 per cent this fiscal — without the impact of demonetisation being taken into consideration, according to an official advance estimate for the year released on Friday. The actual expansion in the first six months of 2016-17 stood at 7.1 per cent.

The country’s gross domestic product will grow at 7.1 per cent in 2016-17 compared with 7.6 per cent in 2015-16, according to the estimate of national income for 2016-17 released by the Central Statistics Office (CSO).

“The growth in deposits is an outlier, hence November data was not used for the financials,” India’s Chief Statistician T.C.A. Anant said, implying that demonetisation is not a normal factor in the calculation of annual national income.

The CSO has primarily used seven-month data to extrapolate for the full fiscal.

The anticipated growth of real GVA (gross value added, which excludes taxes and subsidies) in 2016-17 is 7 per cent against 7.2 per cent in 2015-16, said an official statement.

The GVA at basic prices for 2016-17 for manufacturing sector is estimated to grow by 7.4 per cent as compared to growth of 9.3 per cent in 2015-16.

The agriculture, forestry and fishing sector is likely to show a growth of 4.1 per cent in its GVA during 2016-17, as against the previous year’s growth rate of 1.2 per cent.

The estimated growth in GVA for financial, insurance, real estate and professional services sector during 2016-17 is placed at 9.0 per cent as compared to growth of 10.3 per cent in 2015-16.

The GDP advance estimates, which are normally released in February have been released earlier this year since the government plans to prepone the presentation of the Union Budget to February 1.

While announcing its monetary policy review last month, the Reserve Bank of India acknowledged the demonetisation factor and lowered their GVA growth estimates for the current fiscal to 7.1 per cent from the 7.6 per cent forecast earlier.

The International Monetary Fund had in October projected India’s GDP growth at 7.6 per cent in 2016-17. The Finance Ministry’s Economic Survey forecast a GDP growth in the range of between 7 per cent and 7.5 per cent.

On November 8, Prime Minister Narendra Modi announced that Rs 1,000 and Rs 500 notes were no longer legal tender, saying the move was aimed to eliminate black money, counterfeit currency and terror financing.

The Nikkei Purchase Managers’ Index (PMI) survey released earlier this month showed that demonetisation provoked a downturn both in Indian manufacturing and services growth in December.

Besides, the output of India’s eight infrastructure industries in November 2016 increased by 4.9 per cent, but fell sequentially as compared to the 6.6 per cent growth logged in October.

The GDP advance estimates have taken into account the data on industrial production till October, corporate results till end September and the data on bank deposits and credits only till end-October.

“Because it is not an ordinary event, nobody’s assessment is fact-based,” the Chief Statistician said with reference to other estimates allowing for the depressive impact of demonetisation.

He also said the CSO does not use indicators based on money supply in their computation of national income.

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