Gross Domestic Product numbers of a country are particularly crucial. Being the monetary measure of the market value of all final goods and services produced during a period, GDP numbers are important to determine the health of a country’s economy.
India’s GDP numbers for the third quarter were expected to be unique and reflect a slowdown in the country’s growth as the fastest growing economy in the world.
However, a third-quarter FY17 GDP at 7 per cent compared with 7.2 per cent last year has left many surprised. This number strongly surpasses China’s 6.7 percent growth number retaining India’s position as the world’s fastest growing major economy.
The widely unpopular move by Indian Prime Minister Narendra Modi last November that led to the demonetization of INR 500 & INR 1000 notes was expected to have just one outcome – slowdown in economy. The projection of GDP numbers, however, paints a different picture.
According to the Central Statistics Office India’s third quarter GDP grew at a faster-than-expected pace despite demonetization.
Agriculture growth was measured at 6 per cent compared with -2.2 last year and industries growth was measured at 6.6 percent compared with 4.6 per cent.
Among the laggards was the manufacturing sector output which fell to 8.3 per cent compared with 12.8% a year ago; services growth which fell to 6.8 per cent from 9.4 per cent earlier.
Construction sector growth was lackluster too at 2.7 per cent from 3.2 per cent last year. The mining sector output was recorded lower at 7.5 per cent Vs 13.3 per cent.
Economic Affairs Secretary Shaktikanta Das said the GDP numbers negate the negative speculation on demonetization and the benefits of the note ban will be felt from April onwards. He added that the completion of the remonetisation process is expected to fuel consumption.
Last week, the International Monetary Fund said India’s economic growth is expected to slow to about 6 per cent in the second half of fiscal 2016-17, before rebounding in the course of 2017-18.