Indian economy may grow less than 7% this year

Weighed down by demonetisation, India’s economy may have decelerated below 7% in the current financial year ending March 2017.  The official figures of advanced estimates of national income for 2016-17 to be released on February 28 may forecast the growth rate in the range of 6.8% to 6.9%, informed sources told DH.

This will be the second advanced estimate of national income. For the first time, the estimates will factor in the impact of demonetisation. Sources said the economy may have slowed by more than 0.5% point than estimated 7.6% last year. “The economy could grow in between 6.8% and 6.9% in 2016-17. The impact of demonetisation on consumption and cash payment is a bit more than expected.,” it said. The first advanced estimates of national income which projected the gross domestic product growth at 7.1% was brought out in January.

But it had not incorporated the impact of demonetisation.The second advance estimate and the quarterly GDP estimate for the October-December 2016 period will be released on February 28.

Last week the Reserve Bank of India too cut the growth forecast to 6.9% from the earlier 7.1%. Before that the International Monetary Fund, World Bank and some rating agencies too downgraded their forecast for 2016-17 on the back of November 8 demonetisation hurting country's vast cash-based economy.

The IMF while cutting India's growth forecast to 6.6% in 2016-17 had even cautioned that the country may lose its crown of world's fastest growing large economy. The IMF had forecast China's GDP growth a notch above India's at 6.7%.
The World Bank lowered India's GDP forecast to 7% for the year.

The Economic Survey released just before the Budget has however pegged the 2016-17 economic growth rate at 6.5%.