Indian economy grew at 7.1% in 2016-17, Q4 GDP growth at 6.1%

New Delhi, May 31 (IANS) Demonetisation took a toll on the Indian economy with the Gross Domestic Product during the fourth quarter, ending March this year, falling sharply to 6.1 per cent from seven per cent in the previous quarter while growth for the year as a whole also declined correspondingly. Industry reacted to the numbers saying these reflected the impact of demonetisation.

Data released by the official statistician on Wednesday showed that India's GDP during the past fiscal grew at 7.1 per cent, at a rate lower than the 8 per cent achieved in 2015-16.

"Real GDP at constant (2011-12) prices in Q4 of 2016-17 is estimated at Rs 32.28 lakh crore, as against Rs 30.42 lakh crore in Q4 of 2015-16, showing a growth rate of 6.1 percent," the Central Statistics Office said.

In terms of Gross Value Added (GVA), which excludes indirect taxes, the growth came in even lower at 5.6 percent over the GVA for 2015-16.

"Real GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs 121.90 lakh crore showing a growth rate of 7.1 percent over the year 2015-16 of Rs 113.81 lakh crore," the CSO said in a statement.

India's GDP grew at the rate of 8 per cent during the previous fiscal 2015-16, the CSO said releasing the revised numbers that employ the new series of Index of Industrial Production (IIP) and Wholesale Price Indices (WPI).

At a press conference, Chief Statistician T.C.A. Anant sought to downplay the impact of the note ban of November last year.

"I would caution against reading a single number that comes out after an event as being reflective of consequences of the event," he said in reply to questions on the impact the note ban decision of November last year had on the economy.

He recalled that even earlier when people asked him about demonetisation, he had pointed out that analysis of policies like demonetisation cannot be done through simple "post-hoc" impact analysis type of reasoning.

"A policy impacts society through a variety of channels, through a variety of processes and impact analysis of a policy is extremely sophisticated in econometrics," Anant said.

In the March quarter, agriculture, forestry and fishing sectors grew at 5.2 per cent.

While mining and quarrying grew at 6.4 per cent, manufacturing output increased at 5.3 per cent, electricity, gas, water supply and other utility services went up at 6.1 per cent and trade, hotels, transport and communication at 6.5 per cent.

However, the construction sector output shrank 3.7 per cent.

"There are a number of areas where improvement is required - capital formation continues to be below 30 per cent, we would like to see that in excess of 30 per cent to drive the economy much faster," Anant said.

Other data released on Wednesday by the Commerce Ministry showed the country's eight core, or infrastructure, industries' output growth slowed to a three-month low of 2.5 per cent in April, caused by a slowdown in refinery output and a fall in coal production.

The Eight Core Industries (ECI) data which represents the output of major industrial sectors like coal, steel, cement and electricity had grown by 8.7 per cent in the corresponding month of 2016.

Annual growth in refinery production slowed down to 0.2 per cent last month, from 2.0 per cent in March. Coal production too decreased by 3.8 per cent in April 2017.

Commenting on the figures, industry chamber Ficci President Pankaj Patel said in a statement: "Even though the GDP growth for 2016-17 is in line with the estimate put out earlier this year, the quarter four numbers do point towards moderation which can be attributed to the ban of high denomination currency notes last year."

"The estimates of GDP is in line with the expectations and estimates put forth by different institutions such as RBI, World Bank and others, showing moderately downward movements in the economic activity due to withdrawal of specified bank notes, slow pace of fixed capital formation and decline in manufacturing activity," industry body Assocham said in a release here.