With the slump in manufacturing, mining and construction sectors across the country, India's economic growth is losing momentum. The country's Gross Domestic Product (GDP) growth is estimated to slow down to 7.1 per cent in current fiscal, from 7.6 per cent in 2015-16, the Government data showed on Friday.
As far as the current data is concerned, the Government did not factor the figures post-demonetisation. Releasing the data compiled by the Central Statistics Office
(CSO), Chief Statistician TCA Anant said the figures for November were available and examined but 'it was felt in view of the policy of denotification of notes there is a high degree of volatility in these figures and conscious decision was taken not make projection using the November figure'.
Several economists and experts have said the demonitisation move could drag down growth in the next fiscal year to 6.5 per cent to 7 per cent, as small businesses fired workers, consumer demand fell and farmers' sowing efforts were badly hit by the note ban move. Following the move, nearly 90 per cent of transactions used to be in cash in the country, which was gripped by a severe shortage of currency after Prime Minister Narendra Modi's November 8 decision to take Rs 500 and Rs 1,000 notes out of circulation overnight.
India Inc also said further downward risks to growth prevail as demonetisation may pull down economic growth in the next one or two quarters. Given the current scenario, corporate biggies are pinning 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.
As the Finance Minister, Arun Jaitley, is heading to present the Budget for 2017-18 on February 1, the industry giants said policymakers should take doable steps to revive fixed investments and production of capital goods which are falling continuously, and urged the Government to unveil policy initiatives to unclog the cash flows in large projects.
"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," said CII Director General Chandrajit Banerjee, adding that as per the Advance Estimates, while there is an upsurge in the growth of public investment, this has yet to crowd in private investment which continues to be sluggish thereby stymying growth.
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 the sectoral data for only seven months or till October.
The real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 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 May 31, 2016.
However, industry body Assocham said further downward risks to growth still prevail in the form of continuous fall in fixed investments and index of industrial production, unsolved problem of bank NPAs in India, political risks in the euro area and the UK, emerging geo-political risks and the spectre of financial market volatility. "In addition to this, rising crude oil prices will adversely affect the current account deficit and exchange rate and unpredictability in the Indian economy due to recent policy stances and announcements on demonetisation and other related factors could adversely impact the GDP," it said.