After overtaking China in economic growth rate since 2015, India has been retaining its pace with an upward trend to some extent. Claiming to be the world’s fastest growing large economy, the nation, on Tuesday, showed that its Gross Domestic Product (GDP) accelerated to 7.3 per cent in the September quarter due to the growth in farm output mostly across the country.
The Government feels that although GDP growth numbers for the first half of the current fiscal have revealed a good and consistent performance, the momentum may be hit in the coming months by the impact of demonetisation of high value notes with lot of uncertainty for the second half. Meanwhile, monthly macro-economic data on performance of eight core infrastructure sectors also showed a positive sign with six-month high growth of 6.6 per cent in October.
“What we have for first half are actual numbers. It shows good consistent performance. For second half we will have to see, there are a lot of uncertainty. We have to analyse it before we say something. What is worrying, however, is the decline in Gross Fixed Capital Formation (GFCF) an indicator of investment,” said Chief Economic Adviser Arvind Subramanian.
According to the Government data released on Tuesday by the Central Statistics Office (CSO), the Gross Value Added (GVA), which is estimated at the basic price, growth decelerated to 7.1 per cent as compared 7.3 per cent both in the previous as well as the year ago period.
The GDP which rose from 7.1 per cent in the previous quarter, however, is lower than 7.6 per cent recorded in the same period last year. “Over 7 per cent growth was recored by public administration, defence and other services, financial, insurance, real estate and professional services, manufacturing and trade & hotels and transport and communication and services related to broadcasting,” the data revealed.
The growth rates in agriculture, forestry and fishing; mining and quarrying; electricity, gas, water supply and other utility services; and construction were at 3.3 per cent, (-) 1.5 per cent, 3.5 per cent and 3.5 per cent respectively. This compares with 2 per cent, 5 per cent, 7.5 per cent and 0.8 per cent year ago period. The manufacturing sector slowed to 7.1 per cent from 9.2 per cent in the year-ago period.
On the impact of demonetisation of old `500/1000 notes on growth prospects, Chief Statistician TCA Anant said statements made by experts on the adverse impact of demonetisation is made without any data. “People make assumptions and based on that they make statements. Once the data comes in, I will make a statement,” he said.
Anant also informed that the advance estimates for national accounts data for the current fiscal will be released on January 7, a month in advance. The data release date is being advanced as the Government would be presenting Budget a month ahead of the usual practice of unveiling it on last working day of February.
As per the data, the GFCF growth rates at current and constant prices are estimated at (-) 3.2 per cent and (-) 5.6 per cent during Q2 of 2016-17 as compared to 7.5 per cent and 9.7 per cent during Q2 of 2015-16.
looking forward to the challenges ahead, Subramanian said that investment was down substantially in the second quarter and that is something that needs to be watched. Referring to the impact of demonetisation of 500 and 1000 rupee notes by the Government earlier this month, CII Director General Chandrajit Banerjee also said that it would be a temporary setback to growth in the coming quarter.
As per the CSO data, GDP at constant (2011-12) prices in the second quarter of 2016-17 is estimated at `29.63 lakh crore, as against `27.62 lakh crore in the year-ago period. The quarterly GVA at basic price at constant (2011-12) prices for July-September is estimated at `27.33 lakh crore, as against `25.52 lakh crore year-on-year. The Government Final Consumption Expenditure (GFCE) at current prices is estimated at `5.15 lakh crore for the second quarter as against `4.27 lakh crore year ago.