New Delhi: The
demonetisation-hit economy, which is expected to limp back to normalcy
by the middle of this calendar year, may report a GDP growth rate of
around 7 per cent for 2016-17, according to North Block economists.
Of
course, like all cautious economists, North Block’s tribe of coffee
swigging GDP forecasters and policy sherpas will add a ceteris paribus
(all other things being equal), the Latin term that the followers of
John Stuart Mill use to indicate they may be wrong if things do not turn
out the way they see it.
The data for making the calculations in
this year’s economic survey will be those which the government has
managed to get by the first week of January, which means December
factory and farm data will have to be included.
However,
one-fourth of the year’s GDP figures will be guesswork as there are no
past precedents or understanding of how demonetisation has played out
with productive relations, North Block czars admitted in private
conversations.
"Usually, we get an extra month’s data as the
survey is released on 27th February. Plus, we usually can figure out how
the last two months will pan out given the trends in the previous
months. This time it’s a blinder walk," the economists said.
An
earlier estimate by the Central Statistical Organisation (CSO) had
projected the Indian economy to grow at 7.1 per cent this financial year
– far slower than 7.6 per cent in 2015-16. The CSO forecast did not
take into account the impact of demonetisation, which sucked out 86 per
cent of the cash in circulation through an executive fiat on November 8.
The CSO prediction was based on data for the first seven months, that is, till the end of October.
India
still nominally remains the world’s fastest growing major economy,
ahead of the 6.7 per cent growth in China, which is battling an
industrial deceleration.
The big question is whether India can
retain that position once the impact of demonetisation is fully factored
in. Other independent economists have suggested the GDP growth between 6
per cent and 6.5 per cent in the current fiscal.
In last year’s economic survey, North Block had set a GDP growth target of 7-7.75 per cent for the current year.
A
growth rate near the lower end of the spectrum is seen as below par for
the course. But economic mandarins blame it on inclement global
headwinds, including Brexit, and rising protectionism among many nations
in their report.
India is expected to grow up to around 8 per
cent in 2017-18. "We plan to give a range for GDP growth, no
single-digit targets," said officials.
Please click here to read more.