Contrary to the fears that demonetisation will take a toll on the GDP growth, India’s economy grew 7% in the third quarter (October-December) this fiscal, only slightly below the 7.4% expansion in July-September period.
The bulk of economic growth came from agriculture, manufacturing and mining sectors which accelerated at a faster pace. The government’s spending in the economy too rose at a handsome 12% in three months to December in the wake of a lacklustre performance by private sector.
Buoyed by the numbers, the government maintained the full year (2016-17) economic growth projection at 7.1% as announced earlier. Most of the other agencies including the Reserve Bank of India (RBI) have cut FY17 GDP growth rate.
While agriculture sector grew at 6% in Oct- Dec period, manufacturing sector accelerated 8.3% and mining rose 7.5%. Growth in electricity, gas, water and other utilities too grew 6.8% in the same period.
“The growth numbers completely negate the negative speculation made by a few. It is very satisfying to see the progress on remonetisation. We still maintain our full year economic growth forecast at 7.1%,” Economic Affairs Secretary Shaktikanta Das told reporters after the official figures were out.
Government’s Chief Statistician T C A Anant, however, said, “policies like demonetisation are difficult to assess without a lot of data coming in.”
No co-relation
The growth numbers also puzzled many analysts who saw no co-relation between the officials growth figures and the third quarter results of most of the private sector companies.
But, Chief Economic adviser at State Bank of India, Soumya Kati Ghosh said that the official GDP numbers are subject to many revisions and hence one should treat the current data point with caution.
Growth in construction and real estate sectors came down in the quarter under review and hovered around 3%. The sector has been badly hit after demonetisation as it was reflected in the core sector data for January which showed cement sector down at -13%.
The Gross Fixed Capital Formation (GFCF) which is barometer of investment in the economy, grew 3.5% in the Oct-Dec quarter.
“With the second advance estimate for 2016-17 at 7.1%, the data belies the widespread expectation of sub 7.0% growth this fiscal year. The process of remonetisation is complete and we see the economy getting back on track. The consumption activity is gradually picking up..,” industry body Ficci said in a statement.
Published 28 February 2017, 18:51 IST