Country’s GDP growth is estimated to slow down to 7.1 per cent in current fiscal, from 7.6 per cent in 2015-16, mainly due to slump in manufacturing, mining and construction sectors, the government data showed today without factoring in ‘volatile’ post-demonetisation figures.
The Central Statistics Office (CSO) estimate is based on data available till October, Chief Statistician TCA Anant said. This means the impact of demonetisation announced in November is yet to be factored in.
"It was felt in view of the policy of denotification of the currency notes, there is a high degree of volatility in theses figures and conscious decision was taken not make projection using the November figure," Anant said.
If the economy grows at 7.1 per cent as predicted, it will be the slowest pace of expansion in three years. In 2015-16, the economy had expanded at 7.6 per cent and at 7.2 per cent in 2014-15.
The advance estimates of GDP growth are typically released by the Statistics Office in February. But this year, they have been released earlier as the government plans to bring forward the presentation of the Union Budget to February 1.
So far this year, the Indian economy expanded by 7.1 per cent and 7.3 per cent in the first and second quarters of 2016-17. But analysts say that the GDP growth numbers in the next two quarters are likely to be hit due the cash crunch following the notes ban.
The impact of demonetisation is still playing out and at this juncture it is difficult to estimate the extent to which notes ban will hurt economic growth this year, analysts say. Some analysts even see the impact stretching to the next financial year, starting April 1.
Analysts say that after the GDP growth rate could drop sharply if demonetisation is taken into account. "Take demonetisation into account, the rate will substantially drop," said Aneesh Srivastava, chief investment officer of IDBI Federal Life Insurance.