Agriculture, real estate witness sharp revision

NEW DELHI: The government on Thursday sharply revised the GDP growth estimates for the last two financial years, resulting in a 7.2% expansion in 2017-18 and an 8.2% acceleration in economic activity in 2016-17 — making the year of demonetisation the fastest growing fiscal since 2010-11.The numbers for 2016-17 surprised economists as there was widespread belief that demonetisation slowed down the economy. With quarterly estimates for the year unavailable, analysts were unable to get a fix on the numbers.“The GDP data for FY17 doesn’t fit in well with high frequency data and the narrative of slowdown after demonetisation. Once quarterly data is released there’ll be more clarity on how growth evolved during that year,” said A Prasanna, chief economist, ICICI Securities Primary Dealership.The economy took a hit in the March-quarter as well as the June-quarter, when the effect of de-stocking ahead of GST launch added to the pressure, according to government officials.“The revision in the data is surprising and it turns the story of a slowdown beginning from the second quarter of FY17 on its head. It may be noted that first quarter FY17 GDP numbers were at their highest level of 8.1% and then started declining. Thus the common notion was that the slowdown in GDP growth had started well before the third quarter of FY17, when demonetization happened, now begs a completely different explanation,” SBI Group chief economic adviser Soumya Kanti Ghosh said. He suggested that demonetisation probably resulted in cash being used for consumption.Based on the gross value added, at constant prices, the sharpest revision was seen in case of agriculture, real estate, transport, other services and construction, which some of the economists suggested did not tally with the reports post-demonetisation. Policymakers have been ecstatic that India has maintained its position as the fastest growing major economy in the world as growth in China is expected to moderate.The Central Statistics Office said that the revision for 2016-17 was based on updated estimates of production and prices on the farm and industrial sector, revised spending and tax data for the Centre and the states, corporate performance numbers as well as the latest statistics on the financial sector.