NEW DELHI: The country’s economic growth is likely to decelerate to 7.1 per cent this financial year from 7.6 per cent the previous year, according to government data released on Friday. The first advance estimates of the GDP, released by the Central Statistics Office, is in line with the latest forecast of the Reserve Bank of India. However, interestingly, it does not take into account the data for the month of November.
“The figures for November were available and examined, but it was felt that there is a high degree of volatility in these figures due to demonetisation and conscious decision was taken to not include it in the projection,” Chief Statistician TCA Anant said. Experts feel that the growth could drop further, substantially, if the months hit by demonetisation are taken into account.
“I am very worried with the projected growth rate. Despite excluding demonetisation, projected rate is 7.1 per cent. This is below my estimate of 7.5 per cent. If demonetisation is taken into account, the rate will drop substantially. My estimate was 6.8 per cent, but now it will be much lesser,” said Aneesh Srivastava, chief investment officer of IDBI Federal Life Insurance Company, speaking to Reuters.
“Slowdown was visible and it will be bad when the next estimates are released. The projections are of a 2-5 per cent slow down,” says economist Aamirullha Khan. With the growth slowing, experts also feel there is very limited scope for the central bank to cut key rates in February. “I feel there is very limited scope for RBI interest rate cuts, even in February. If banks are now cutting their lending or deposit rates, it is something which one would have expected to happen earlier,” says Sunil Kumar Sinha, of India Ratings and Research.
Much ahead, several independent rating agencies and broking houses cut their growth estimates for India, anticipating temporary disruption due to the note ban. While Fitch lowered its forecast to 6.9 per cent from 7.4 per cent, Morgan Stanley cut it to 7.4 per cent from 7.7 per cent and India Ratings and Research revised its forecast from to 6.8 per cent.