GDP growth: Q3 estimates lessen the Demonetisation worry...!
It could be mentioned that the election commission gave a clearance to the release of only national level data and had barred CSO from releasing State-specific data on economic growth projections, in view of the ongoing Assembly elections
New Delhi: In a pleasant surprise to the Indian economy, the Central Statistics Office (CSO) has estimated the GDP growth for third quarter in 2016-17 unchanged at 7.1 per cent.
The CSO, in his release of second advance estimates of economic growth on Tuesday, has provided the GDP (Gross Domestic Product) and GVA (Gross Value Added) figures indicating the growth to have slowed down to 7 per cent from 7.3 per cent, a turnout of second quarter of the year.
According to the economy analysts, this growth has signalled that the independent economic forecasters may have overstated the drag on the economy from the November withdrawal of high-value currency notes.
“The GDP numbers negated the ‘negative speculation on demonetisation’ ”, said Economic Affairs Secretary Shaktikanta Das, commenting on the latest data, further adding that the report has proved that there was an overestimation about the impact of demonetisation by some.
Official figures projected in the third quarter report:
- GVA growth for the full year at 6.7 per cent as against the 7 per cent projected in the first advance estimates.
- The GVA growth rate of Q3 is estimated at 6.6 per cent, down from the 7.1 per cent reported in Q2.
- The GVA growth rates for the first two quarters were revised downward to 6.9 per cent in Q1 and 6.7 per cent in Q2, from the 7.3 per cent and 7.1 per cent, that was reported earlier.
- The agricultural sector growth in January was at 4.4 per cent, compared with the first advance estimates which had predicted a growth of 4.1 per cent for the sector. According to the data showed by the second advanced estimates the agriculture sector faring better than estimated.
- Kharif crops’ growth is presented as 9.9 per cent as against 8.9 per cent of second quarter.
Mining and Manufacturing growth...
- Mining and quarrying is now expected to expand at 1.3 per cent in 2016-17, instead of the January prediction of a contraction of 1.8 per cent.
- The manufacturing growth was pegged for the full year at 7.7 per cent in second advanced estimates compared with 7.4 per cent predicted by the first advance estimates.
What the analysts said:
- Chief Statistician of India TCA Anant stated, while addressing a press conference, “The reason why GDP has maintained is because the reduction in GVA has been compensated for by an improved estimate in net indirect taxes.”
- He further added, “The advance estimates of agricultural growth now show a higher growth than they had shown earlier.”
- “The revised estimates of subsidies are now available and they show a much tighter compression than was provided for in the Budget Estimates,” Mr. Anant said adding, “Subsidies show a negative growth and indirect tax collections showed positive growth, so GDP growth has remained the same.”
- Madan Sabnavis, Chief Economist at Care Ratings. “Since the CSO has not revised downward the annual estimate, we can expect that there should not be further changes on account of demonetisation. The numbers are vindication that demonetisation didn’t have a major impact on the economy. They have looked at all the numbers at their disposal and have come out with their estimate.”
- He stated that this GDP estimate is a pleasant surprise for the Indian economy. “They are projecting a 9.9 per cent growth for kharif crops as against 8.9 per cent. In mining and quarrying, IIP for April-December was 0.9 per cent as opposed to a contraction of 0.2per cent in April-October, which was used in the first advance estimates. Manufacturing grew 0.5 per cent in April-December as opposed to a contraction of 0.1 per cent in April-October,” said the economist.
It could be mentioned that the election commission gave a clearance to the release of only national level data and had barred CSO from releasing State-specific data on economic growth projections, in view of the ongoing Assembly elections.