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 on Friday 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.