India's GDP to grow 7.1% in FY'17, retain fastest growing tag

The government today pegged GDP growth at a higher-than-expected 7.1 per cent for the current fiscal despite note ban with agriculture sector doing exceptionally well, helping India retain the tag of world's fastest growing major economy.

The Central Statistics Office (CSO) put the growth rate for October-December -- the quarter in which the government banned 86 per cent of the currency in circulation -- at 7 per cent, compared to 7.4 per cent in the second quarter and 7.2 per cent in the first quarter.

The growth rate was on a higher base after the CSO revised 2015-16 GDP growth rate to 7.9 per cent from the earlier provisional estimate of 7.6 per cent.
 

India's growth was higher than China's 6.8 per cent for the October-December period of 2016.

Economic Affairs Secretary Shaktikanta Das said the CSO numbers have vindicated the government's position and the criticism of note ban was anecdotal and not supported by data.

The CSO data revealed that GVA (Gross Value Added) is anticipated to increase from Rs 104.70 lakh crore in 2015-16 to Rs 111.68 lakh crore in 2016-17.

"Anticipated growth of real GVA at basic prices in 2016-17 is 6.7 per cent against 7.8 per cent in 2015-16," the release said.

The 'agriculture, forestry and fishing sector' is likely to show 4.4 per cent growth in its GVA during 2016-17, as against the previous year's growth of 0.8 per cent.

The growth numbers were better than those projected by the RBI (6.9 per cent) and international agencies like IMF (6.6 per cent).

The GDP projection for the fiscal at 7.1 per cent in the second advance estimate is same as it was suggested in January by the CSO.

Replying to questions after releasing data, Chief Statistician T C A Anant said that policies like demonetisation are very difficult to assess without a lot of data coming.

"But the immediate effect is based on the data currently available. We will keep on evaluating our numbers as and when more data is available," he added.

Commenting on the data, Ranen Banerjee of PwC India said: "While the Q3 GDP estimates have been put at 7 per cent, this may not have factored in the entire short-term impact of demonetisation. The impacts are likely to be more visible in Q4 with the lag effects of November and December becoming more pronounced.