India's economy will grow at 6.9 per cent in 2016-17, according to NCAER's (National Council for Applied Economic Research) quarterly review. This is a notch lower than 7.1 per cent forecasted by government's own statistical department and higher than IMF's 6.6 per cent. NCAER predicts a growth rate of 7.3 per cent for 2017-18.
The agency blames demonetisation and global uncertainty for the downward forecast.
"The removal of the legal tender status of high value currency notes (Rs 500 and Rs 1,000) with effect from the midnight of November 8, 2016 took the domestic economy by surprise, raising fresh anxieties about economic recovery, leading to a downward forecast. Global economic uncertainty has added to these concerns," says the report.
NCAER says the Gross Value Added (GVA) at Basic Prices at constant (201112) prices is predicted to grow at 6.3 per cent in 2016-17 and 7 per cent in 2017-18.
Its estimates suggest that in 2016-17, the total foodgrain production is going to touch a record of 272 million tonnes—8 per cent higher than the corresponding figure of 251.6 million tonnes harvested last year. The inflation therefore will remain low in 2016-17. However, it is projected to accelerate in 2017–18 due to rising crude oil.
The growth of the industrial sector remained lackluster. The overall Index of Industrial Production (IIP), a measure of industrial performance, shows a growth of 0.3 per cent during April–December 2016–17, compared to the 3.2 per cent growth recorded during the same period of 2015–16.
The year-on-year growth of Gross Value Added for the services sector (excluding construction) showed stagnant growth between 201516 (8.9 per cent) and 201617 (8.8 per cent).
"The performance of the external sector in the third quarter of 201617 has shown signs of improvement. Merchandise exports grew for the fifth consecutive month in January 2017, up by 4.3 per cent," it said.
Consumer price inflation trended down with inflation being at a two-year low of 3.2 per cent in January 2017.
(With inputs from PTI)
