Demonetisation to pull down Indias GDP growth in near term

CII Director General Chandrajit Banerjee said the demonetisation move will act as a temporary setback to growth in the coming quarter, adding that the numbers point to continuing dependence on consumption and public spending to revive demand while investments are showing a declining trend compared with last year.
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Dec 01, 2016, 09.28 AM | Source: PTI

'Demonetisation to pull down India's GDP growth in near term'

CII Director General Chandrajit Banerjee said the "demonetisation move will act as a temporary setback to growth in the coming quarter", adding that the numbers point to continuing dependence on consumption and public spending to revive demand while investments are showing a declining trend compared with last year.

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Demonetisation to pull down Indias GDP growth in near term

CII Director General Chandrajit Banerjee said the "demonetisation move will act as a temporary setback to growth in the coming quarter", adding that the numbers point to continuing dependence on consumption and public spending to revive demand while investments are showing a declining trend compared with last year.

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Demonetisation to pull down Indias GDP growth in near term
As Indian economy grew at 7.3 percent in the September quarter, experts and India Inc said downside risks prevail on account of lower consumption due to demonetisation and global headwinds, predicting the country's GDP growth to slow down in the near term.

CII Director General Chandrajit Banerjee said the "demonetisation move will act as a temporary setback to growth in the coming quarter", adding that the numbers point to continuing dependence on consumption and public spending to revive demand while investments are showing a declining trend compared with last year.

Principal Economist at Icra Aditi Nayar said the data "impart a further downside to our GDP and GVA growth forecasts of 7.5 percent and 7.3 percent for FY2017, which we had revised downwards post-demonetisation".

"The downside risks to India's economic growth prevail in the form of demonetisation, Brexit, transition of Chinese economy, protectionist measures adopted by advanced economies, monetary policy's inability to fuel growth in developed economies and unsolved problem of banks' non-performing assets in India," Assocham Secretary General D S Rawat said.

The Indian economy grew at 7.3 percent in the September quarter of the current fiscal, up from 7.1 percent in the previous three months, mainly on improved performance of manufacturing, services and trade sectors.

"The second quarter GDP and GVA growth at 7.3 percent and 7.1 percent, respectively, are lower than expected. And now with de-legalisation of high denomination currency, the GDP/GVA growth will be much lower than our forecast of 7.8 percent," Sunil Kumar Sinha, Principal Economist at India Ratings & Research said.

The Gross Domestic Product (GDP) or national income was 7.6 percent in the second quarter of the last fiscal.

According to the data released by the Central Statistics Office, the gross value added (GVA), which is estimated at the basic price, showed a growth of 7.1 percent in the second quarter of 2016-17, as against 7.3 percent a year ago.

The GDP growth data are calculated under the new methodology at market price while GVA is calculated primarily at factor cost. GDP is GVA plus taxes on products, minus subsidies on them.

The sectors which registered growth of over 7 percent in July-September are public administration, defence and other services, financial, insurance, real estate and professional services, manufacturing and trade, hotels and transport and communication and services related to broadcasting, the data showed.

Growth in agriculture, forestry and fishing, mining and quarrying and construction is estimated to be 1.8 percent, (-)0.4 percent and 1.5 percent, respectively.

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Demonetisation to pull down Indias GDP growth in near term

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