Economy will grow at a slower pace of 7.1 per cent this fiscal, as against 7.6 per cent last year, mainly due poor showing by manufacturing, mining and construction, government data showed today without factoring in the demonetisation impact.
Releasing the data compiled by the Central Statistics Office (CSO), Chief Statistician T C A Anant said, "It is difficult to talk about the impact of demonetisation at this point of time ... At this point the drop (in GDP estimates) is not attributable to any policy change (demonetisation)."
Economists and experts have been repeatedly talking about the adverse impact of note ban, effected on November 9, on GDP in near term including in the current fiscal.
About factoring in the impact of demonetisation, Anant said, "We don't need to speculate. It (the estimates) is on actual outcome based data. We have not taken bank deposits and credit data for the month of November due to volatility because of major policy change."
He explained that the CSO has factored in all latest data available so far while arriving at a conclusion the economic growth will be 7.1 per cent this fiscal.
He also said that CSO does not make adhoc estimates and current figures are based on indicators available as of now.
Elaborating the reasons for slowdown, he also said that slowdown in economy is by and large on account of (bad performance of) index of industrial production.
Commenting on the data, Economic Affairs Secretary Shaktikanta Das said, "Being a statistical organisation, CSO has to go on real statistics and we cannot expect them to go on the basis of impressions and anecdotal evidence."
Several economists have predicted that growth will slow down in the near term as economic activity has taken a hit on account of note ban. Even former Prime Minister Manmohan Singh has projected economic growth to plunge by 2 percentage points.
Das said: "Today whatever figures, whatever statistics are coming about the impact of demonetisation are broadly, mostly anecdotal and mostly based on anecdotal evidence".
Outlining gross fixed capital formation as an area of concern, Das said the government will take necessary measures in that direction. Gross fixed capital formation is a barometer of investment.
"The economic survey and the budget will spell our what approach the government will take, so I would not like to pre-judge and I cannot comment on that, but as I mentioned earlier," he said, adding tax revenues will exceed budget estimates this fiscal.
Accordingly, the 'First Advance Estimates of National Income, 2016-17' did not reflect the impact of demonetisation, effected on November 9 for ban of old Rs 500/1,000 notes, and are based on sectoral data for only seven months or till October.
Given the current scenario, India Inc is pinning its
hopes on a growth-oriented Budget to unleash investments and set the pace for economic growth of 8 per cent and above in the near future.
Finance Minister Arun Jaitley will present the Budget for 2017-18 on February 1.
Commenting on data, industry body CII said, "No doubt, the demonetisation drive is anticipated to result in a downward bias to GDP growth in the next one or two quarters, but this is likely to be a blip in the growth momentum as demand has only been deferred and will re-emerge once the situation becomes normal."
CII said that it looks forward to a growth-oriented Budget which would unleash a new wave of investments and set the pace for economic growth of 8 per cent and above in near future.
Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in 2016-17 is likely to attain a level of Rs 121.55 lakh crore, as against the Provisional Estimate of GDP for the year 2015-16 of Rs 113.50 lakh crore, released on May 31, 2016.
"The growth in GDP during 2016-17 is estimated at 7.1 per cent as compared to the growth rate of 7.6 per cent in 2015- 16," the CSO said.
The CSO projections on national income are now in line with the Reserve Bank's estimates, which too has lowered the GDP growth prospects to 7.1 per cent.
"Anticipated growth of real GVA at basic prices in 2016-17 is 7 per cent against 7.2 per cent in 2015-16," the CSO said.
In value terms, the Gross Value Added (GVA) at constant prices is anticipated to increase from Rs 104.27 lakh crore in 2015-16 to Rs 111.53 lakh crore in 2016-17.
'Agriculture, forestry and fishing' is expected to expand by 4.1 per cent in 2016-17 against 1.2 per cent growth in previous fiscal.
On the other hand, mining and quarrying is likely to shrink by 1.8 per cent after recording a growth rate of 7.4 per cent in 2015-16.
Growth in manufacturing is expected to slow to 7.4 per cent (from 9.3 per cent) and construction activities to 2.9 per cent (from 3.9 per cent).
As per the data, the per capita net national income (current prices) during 2016-17 is estimated to be Rs 1,03,007 showing a rise of 10.4 per cent as compared to Rs 93,293 during 2015-16.
