Hit
hard by demonetisation, India lost the tag of the fastest growing
economy to China in the March quarter with a GDP growth of 6.1 per
cent, pulling down the 2016-17 expansion to a three-year low of 7.1
per cent. The bad news of the economy growing at the slowest pace in
three years mainly on account of poor performance of manufacturing
and service sectors come at a time when the Modi government is
celebrating three years in office. The GDP growth was 8 per cent in
2015-16 and 7.5 per cent in the previous year. The growth for the
2016-17 fiscal slowed down despite very good showing by the
agricultural sector. China had reported a growth of 6.9 per cent in
the January-March quarter of 2017. India had for the first time
outpaced China in GDP growth rate in 2015. As per the data released
by the Central Statistics Office (CSO), the expansion in Gross Value
Added (GVA) during the fourth quarter of 2016-17 fell sharply to 5.6
per cent as compared to 8.7 per cent in the comparable period of
2015-16. For the year as a whole, the expansion in GVA works out to
be 6.6 per cent, down from 7.9 per cent a year ago. The GVA has been
declining for the five straight quarters since January-March, 2016.
On November 9, 2016, the government had demonetised higher value
currency which wiped off about 87 per cent of notes in circulation,
leading to a severe cash crunch and disruption in the economic
activities. When asked whether note ban has impacted fourth quarter
growth, Chief Statistician T C A Anant said a separate analysis is
needed, though he admitted that this was one of the dynamics which
might have impacted economic performance in third and fourth
quarters. Chief Economic Advisor Arvind Subramanian said
demonetisation was a "temporary shock" to the economy and
"we are seeing this bottoming out as remonetisation progresses".
The construction sector was the hardest hit by demonetisation in the
fourth quarter and saw a negative growth of 3.7 per cent during the
period as compared to 6 per cent in corresponding three months of
2015-16. The CSO said the growth rate declined in manufacturing,
mining, trade, hotels, transport, communication, services related to
broadcasting, financial, real estate and professional services, both
in the fourth quarter as well in the entire year. The manufacturing
sector GVA growth declined to 7.9 per cent in 2016-17 from 10.8 per
cent on yearly basis. The mining and quarrying sector witnessed a
sharp deceleration to 1.8 per cent from 10.5 per cent in 2015-16. The
agriculture sector growth, which accelerated to an impressive 4.9 per
cent in the last fiscal from a dismal 0.7 per cent a year ago on
account of good monsoon, failed to compensate for decline in other
sectors of the economy. In the fourth quarter itself, the agriculture
sector GVA rose by 5.2 per cent as compared to 1.5 per cent in the
same period of 2015-16. The data further said the per capita income
during 2016- 17 is estimated to have attained a level of Rs 1,03,219
as compared to the estimates for the year 2015-16 of Rs 94,130,
showing a rise of 9.7 per cent. Gross Fixed Capital Formation (GFCF)
(current prices), a barometer of investments, is estimated at Rs
41.18 lakh crore in 2016-17 as against Rs 40.03 lakh crore in
2015-16.
