New Delhi: The new GDP estimate, which shows demonetisation had little or no impact on the growth trajectory of the country, has prominent economists surprised, while one speculated the growth in financial services thanks to the drive to go cashless may have offset other shortcomings.

“It is a surprise... a pleasant surprise and I will have to look at the numbers carefully,” said NR Bhanumurthy, an economist with the National Institute for Public Finance and Policy.

The Ministry of Statistics and Programme Implementation (MOSPI) on Tuesday estimated that the economy will grow at 7.1% in the fiscal year 2016-17. Tuesday’s release was the ‘second advance estimate’. The first advance estimate was released in January of this year.

What has taken economists by surprise is that there is no difference in the estimate for GDP growth between the first and the second estimates, although the first one didn’t factor in the impact of demonetisation. The latest number is far higher than the Reserve Bank of India’s estimate of 6.9% and Chief Economic Adviser Arvind Subramanian’s projection of 6.5%.

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Govinda Rao, a former member of the Prime Minister’s economic advisory council and previous head of the National Institute of Public Finance and Policy, said he couldn’t hazard a guess as to what extent the MOSPI numbers reflect the impact of demonetisation.

“I am not imputing any motives here. They must have worked with the data they had, but there are a lot of mysterious things in these numbers,” Rao told News18.

He pointed out that the figures showed that private consumption has increased, whereas most data points since demonetisation have indicated that it has in fact decreased. Also, agriculture has been estimated to grow faster this year than the previous year, which Rao said may be an optimistic assumption.

Abhijit Sen, economist and a former member of the Planning Commission, too was cautious. “Did the economy actually grow at the rate the government is saying? I don’t know, because these figures largely capture what occurred in the organized sector whereas demonetisation’s real impact was on the unorganised sector,” he said.

However, Sen felt there were three reasons that could have helped the economy. The first was that tax collections in November and December were good. The second is that industrial production did not suffer too much and the third is that agriculture will probably grow faster this year than last year.

Bhanumurthy said that the reason for the higher than expected growth could be that financial services could have grown at a faster pace because the withdrawal of cash may have forced people to switch to cashless means, pushing up the growth rate of the sector.

All the economists that News18 spoke to said that the real picture regarding GDP growth will become clear when the full year figures come.

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