CHENNAI: India’s GDP growth during the third quarter of the current financial year has beaten analysts’ expectations to stand at 7 percent, retaining the fastest growing major economy tag. China had recorded a GDP growth of 6.8 percent for the same period.
The figure comes despite fears from many quarters that the fallout from demonetisation would bring down GDP growth during the October-December quarter of 2016-17 to as low as 6 percent. A Reuters poll of analysts released last week had estimated that the number would stand at 6.4 percent.
However, while GDP growth for the quarter was not as slow as estimated, it did decelerate from from the 7.4 per cent recorded during the July-September quarter.
According to data released by the Central Statistics Office (CSO) second advanced estimates of India's GDP growth in constant prices (2011-12) for the entire financial year has been pegged at 7.1 per cent, down from 7.9 percent estimated for fiscal year 2015-16.
“Real GDP... in the year 2016-17 is likely to attain a level of Rs. 121.65 lakh crore, as against the First Revised Estimate of GDP for the year 2015-16 of Rs. 113.58 lakh crore, released on January 31, 2017. The growth in GDP during 2016-17 is estimated at 7.1 percent as compared to the growth rate of 7.9 percent in 2015-16,” said the CSO in its statement.
| |||||
| Constant prices (2011-12) | Current prices | ||||
| Annual 2016-17 (Second advance) | 7.1 | 11.5 | |||
| Q12016-17(April-June) | 7.2 | 10.8 | |||
| Q2 2016-17(July-Sep) | 7.4 | 11.8 | |||
| Q3 2016-17(Oct-Dec) | 7.0 | 10.6 | |||
Source: CSO
Government spokespersons pointed out that the numbers prove that demonetisation and its fallout have not had as big an impact on India’s economy as predicted. “The numbers are very satisfying and we continue to remain at 7 per cent growth. All the negative projections about the fallout of demonetisation have been highly over-estimated, because growth continues to remain at 7 per cent and more,” Shaktikanta Das, Economic Affairs Secretary, said.
However, some experts continued to remain skeptical over whether the numbers have captured the entire negative fallout. "While the Q3 GDP estimates have been put at 7%, this may not have factored in the entire short term impact of demonetisation. The impacts are likely to be more visible in Q4 with the lag effects of November and December becoming more pronounced," said Ranen Banerjee, Leader Public Finance and Economics, PwC India.
CSO figures also listed sectors which are likely to register growth rate of over 7.0 percent for the current fiscal year as “‘public administration, defence and other services’, 'manufacturing' and ‘trade, hotels, transport, communication and services related to broadcasting’.” While the gross value added (GVA) in the manufacturing is expected to grow at 7.7 per cent, this will be a deceleration from the 10.6 per cent during the previous year. The Agriculture sector’s growth is predicted at 4.4 per cent for the entire fiscal, up from 0.8 per cent the previous fiscal.
The growth ‘mining and quarrying’, ‘electricity, gas, water supply and other utility services’, ‘construction’ and 'financial, real estate and professional services' is estimated to be 1.3 percent, 6.6 percent, 3.1 percent and 6.5 percent respectively.