Notes Ban Hits Growth But India Still Fastest Growing Economy

[ito]

http://profit.ndtv.com/news/economy...-growing-tag-1664580?pfrom=home-lateststories

India's GDP or gross domestic product growth fell to 7 per cent in the October-December quarter.
Written by Surajit Dasgupta | Last Updated: February 28, 2017 18:51 (IST)

The Indian economy expanded at 7.6 per cent in 2015-16 and at 7.2 per cent in 2014-15.
HIGHLIGHTS

1. GDP growth fell to 7% in the October-December quarter
2. The statistics department sees 7.1% growth for the full year
3. Some economists predict aftershocks of notes ban will linger for months

India's GDP or gross domestic product growth fell to 7 per cent in the October-December quarter, as Prime Minister Narendra Modi's surprise decision to ban high-value currency notes in November hit economic activity. PM Modi had on November 8 scrapped 500 and 1,000-rupee notes or around 86 per cent of the currency then in circulation, putting economic activity on the skids in a predominantly cash-reliant economy. In July-September, India's economic growth had accelerated to 7.4 per cent. Despite the fall, by growing at a better-than-estimated 7 per cent in the third quarter, India retained the tag of fastest growing major economy in the world. The Chinese economy grew at 6.8 per cent in the December quarter.

Here are 10 things to know:

1) "There was just a temporary impact of demonetisation, which is over now. There was an overestimation about the effect of demonetisation by some. It is satisfying to note that this was not true. We still remain a 7 per cent-plus GDP country," said Economic Affairs Secretary Shaktikanta Das.

2) The central statistics office has retained the growth forecast for the fiscal year ending in March 2017 at 7.1 per cent. The December quarter GDP beat the estimates of economists. Analysts polled by Reuters had forecast 6.4 per cent growth for the October-December period.

3) With the cash situation still not back to normal and consumer confidence remaining weak, some economists predict the aftershocks of demonetisation will linger for months. The sale of two-wheeler vehicles, a proxy for rural demand, fell for a third straight month in January.

4) Services activity plunged into contraction following the notes ban, and still hasn't recovered fully, while factory activity also declined in December before returning to a modest growth in January.

5) "The GDP estimates significantly overshoot the expected figures and that's why I feel that the overall impact of demonetisation has still not been factored into these estimates. I expect the impact of demonetisation to linger on for at least another quarter or so, and based on that, I feel that the final GDP numbers would be significantly lower," said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.

6) The Reserve Bank of India (RBI) has called the slowdown a transitory phenomenon and expects a sharp rebound in economic growth in the next fiscal year as cash conditions improve.

7) The International Monetary Fund (IMF) has revised downward, its estimate for India's growth in the year ending March 31, 2017, to 6.6 per cent from 7.6 per cent earlier. It expects India's economic growth to rebound to 7.2 per cent in 2017-18.

8) The Indian economy expanded at 7.6 per cent in 2015-16 and at 7.2 per cent in 2014-15.

9) The economy had grown at 7.2 per cent and 7.4 per cent in the first quarter (April-June) and second quarter (July-September) of 2016-17 respectively.

10) The Economic Survey, which sees the Indian economy growing between 6.75 and 7.5 per cent in the coming fiscal year (2017-18), flagged a spike in oil prices, global trade tension and a spillover of the demonetisation as key risks to growth.

 

[Abingdonboy]

http://profit.ndtv.com/news/economy...-growing-tag-1664580?pfrom=home-lateststories

India's GDP or gross domestic product growth fell to 7 per cent in the October-December quarter.
Written by Surajit Dasgupta | Last Updated: February 28, 2017 18:51 (IST)

The Indian economy expanded at 7.6 per cent in 2015-16 and at 7.2 per cent in 2014-15.
HIGHLIGHTS

1. GDP growth fell to 7% in the October-December quarter
2. The statistics department sees 7.1% growth for the full year
3. Some economists predict aftershocks of notes ban will linger for months

India's GDP or gross domestic product growth fell to 7 per cent in the October-December quarter, as Prime Minister Narendra Modi's surprise decision to ban high-value currency notes in November hit economic activity. PM Modi had on November 8 scrapped 500 and 1,000-rupee notes or around 86 per cent of the currency then in circulation, putting economic activity on the skids in a predominantly cash-reliant economy. In July-September, India's economic growth had accelerated to 7.4 per cent. Despite the fall, by growing at a better-than-estimated 7 per cent in the third quarter, India retained the tag of fastest growing major economy in the world. The Chinese economy grew at 6.8 per cent in the December quarter.

Here are 10 things to know:

1) "There was just a temporary impact of demonetisation, which is over now. There was an overestimation about the effect of demonetisation by some. It is satisfying to note that this was not true. We still remain a 7 per cent-plus GDP country," said Economic Affairs Secretary Shaktikanta Das.

2) The central statistics office has retained the growth forecast for the fiscal year ending in March 2017 at 7.1 per cent. The December quarter GDP beat the estimates of economists. Analysts polled by Reuters had forecast 6.4 per cent growth for the October-December period.

3) With the cash situation still not back to normal and consumer confidence remaining weak, some economists predict the aftershocks of demonetisation will linger for months. The sale of two-wheeler vehicles, a proxy for rural demand, fell for a third straight month in January.

4) Services activity plunged into contraction following the notes ban, and still hasn't recovered fully, while factory activity also declined in December before returning to a modest growth in January.

5) "The GDP estimates significantly overshoot the expected figures and that's why I feel that the overall impact of demonetisation has still not been factored into these estimates. I expect the impact of demonetisation to linger on for at least another quarter or so, and based on that, I feel that the final GDP numbers would be significantly lower," said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.

6) The Reserve Bank of India (RBI) has called the slowdown a transitory phenomenon and expects a sharp rebound in economic growth in the next fiscal year as cash conditions improve.

7) The International Monetary Fund (IMF) has revised downward, its estimate for India's growth in the year ending March 31, 2017, to 6.6 per cent from 7.6 per cent earlier. It expects India's economic growth to rebound to 7.2 per cent in 2017-18.

8) The Indian economy expanded at 7.6 per cent in 2015-16 and at 7.2 per cent in 2014-15.

9) The economy had grown at 7.2 per cent and 7.4 per cent in the first quarter (April-June) and second quarter (July-September) of 2016-17 respectively.

10) The Economic Survey, which sees the Indian economy growing between 6.75 and 7.5 per cent in the coming fiscal year (2017-18), flagged a spike in oil prices, global trade tension and a spillover of the demonetisation as key risks to growth.

Well this is a clearly biased outlook, post demonetisaton growth predictions had been adjusted to 6.4%, now India has actually beaten them considerably (7% actual) but still this BS.

 

[ito]

Well this is a clearly biased outlook, post demonetisaton growth predictions had been adjusted to 6.4%, now India has actually beaten them considerably (7% actual) but still this BS.

But that is what economic survey is saying.

 

[ito]

India's economy expanded by 7 per cent in the third quarter of this financial year, belying fears that note ban would have severely impacted economic activity.

The Central Statistics Office (CSO) has retained the growth projection for the current fiscal at 7.1 per cent, as projected in the first advance estimate in January.

Meanwhile, the CSO has also marginally revised upwards the GDP estimates for the first and the second quarters to 7.2 per cent and 7.4 per cent.

It was feared that demonetisation effected in the middle of the third quarter (November 9, 2016) would have adverse bearing on various segments of the economy.

The Reserve Bank of India and other agencies like IMF and OECD had lowered GDP projections arguing that the note ban would have short-term impact on the Indian economy.

In a statement, the CSO said Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in 2016-17 is likely to attain a level of Rs 121.65 lakh crore, as against the first revised estimate of GDP for 2015-16 of Rs 113.58 lakh crore, released in January 2017.

“The growth in GDP during 2016-17 is estimated at 7.1 per cent as compared to the growth rate of 7.9 per cent in 2015-16," it said.

Real 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 second advance estimates of National Income, 2016-17, revealed that the growth in the GVA from 'manufacturing' sector is estimated to be 7.7 per cent compared to 10.6 per cent in 2015-16.

Commenting on the data, Economic Affairs secretary Shaktikanta Das said this year growth figures are on a high base of last fiscal and numbers "do not show much negative impact of demonetisation".

The per capita net national income (current price) during 2016-17 is estimated to be Rs 103,818 showing a rise of 10.2 per cent compared to Rs 94,178 during 2015-16 with the growth rate of 8.9 per cent.

Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs 88.40 lakh crore in 2016-17 as against Rs 79.00 lakh crore in 2015-16. At constant (2011-12) prices, the PFCE is estimated at Rs 68.26 lakh crore in 2016-17 as against Rs 63.66 lakh crore in 2015-16.

In terms of GDP, the rates of PFCE at current and constant prices during 2016-17 are estimated at 58 per cent and 56.1 per cent, respectively, as against the corresponding rates of 57.8 per cent and 56.1 per cent, respectively in 2015-16.

The data further revealed that Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 40.97 lakh crore in 2016-17 as against Rs 39.89 lakh crore in the last fiscal.

At constant prices, the GFCF is estimated at Rs 35.55 lakh crore in 2016-17 as against Rs 35.35 lakh crore year-on-year.

"In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during 2016-17 are estimated at 26.9 per cent and 29.2 per cent, respectively, as against the corresponding rates of 29.2 per cent and 31.1 per cent, respectively in 2015-16," the CSO said.

The GFCF is expected to register growth rate of 2.7 per cent at current prices and 0.6 per cent at constant prices.

 

[rumrunner]

More than one economist have been shocked by these numbers, stating that they have expected a much larger drop.

Some have expressed doubts about the credibility of these numbers.

http://finance.yahoo.com/news/exper...nomic-growth-slows-7-123128587--business.html

 

[Indika]

Well this is a clearly biased outlook, post demonetisaton growth predictions had been adjusted to 6.4%, now India has actually beaten them considerably (7% actual) but still this BS.

Well most of the tax collection in india comes from indirect taxes and share of direct taxes has drastically fallen down. With demonetization it was only black money that got stifled ie direct taxes. Indirect taxes will more or less be the same. In fact with more vigilance the tax base should increase ,with that some extra percentage get added to gdp & tax collection.

 

[YogaMudra]

This is not surprising at all.

Fake currency and blackmoney are not spent in productive activities like manufacturing or service. They are used to either buy luxury goods, property or fund terror.

Most other business will just continue their economic activity by either extending credit, distributing cash or by using the banking or digital payment platforms.