India’s GDP Witness 7% GDP Growth in Third Quarter of 2016-17

The numbers are likely to trigger a debate among economists and commentators whether they have captured the full impact of demonetisation. But the move to suck out 86% of the currency in circulation caused a cash crunch and hurt economic activity. These were based on incomplete corporate income and factory output data and did not fully factor in the effects of demonetisation.

Anant said some sectors such as agriculture and mining had in fact performed better than expected in the third quarter. But, the GDP figure also offers us a statistical puzzle that the government’s statisticians will have to explain, connecting the missing dots. The growth of 6% in the Agriculture sector from the previous quarters 3.8% owing to the good monsoons was expected.

As the current government enters the final year of its five-year term, all eyes are on this year’s growth target, which will be released in early March at the annual sessions of China’s top legislature and top political advisory body, known as the national “two sessions”.

The CSO also said that the sectors which are likely to register 7% growth in 2016-17 are public administration, defence, manufacturing, trade, hotels, transport, communication and broadcasting-related services. However, the estimates released by the CSO predicts 7.1.

“Only if growth falls below 5.5 percent or rises above 6.5 percent, would there be some need to re-assess India’s growth trajectory in the period ahead”, Deutsche Bank analysts wrote in a note. However, the RBI has projected the group to bounce back to 7.4 per cent in 2017-18.

However, the economics affairs secretary, as well as the Union ministry of finance would like us to believe otherwise. Robust media coverage and anecdotal evidence have clearly established that the informal sector took a hit from demonetisation, with thousands losing jobs. “The positive impact on the economy would be visible shortly”, he added.

Analysts had been expecting an upward revision to 2.1 percent for the fourth quarter.

Economists were waiting eagerly for the GDP numbers as that would indicate to what extent the demonetisation and the note ban had affected the Indian economy.

Economists have cautioned it will be hard to significantly boost the economy’s sustainable growth rate amid weak productivity gains and demographic forces holding back labor-force expansion.

‘Pleasant surprise’ The impact on the real estate sector was widely expected as experts say most transactions are either wholly or partly conducted in cash in a bid to avoid paying tax.