New Delhi: The Economic Survey 2016-17 on Tuesday claimed a mere 0.25 to 0.5 per cent impact of demonetisation on the GDP, which it says would grow in 2016-17 by 6.5 per cent to 6.75 per cent and rebounding in 2017-18 to 6.75 per cent to 7.5 percent.
The optimistic Survey said India would also be the fastest-growing major economy in the world in 2017-18.
This is the first official estimate of GDP for 2016-17, taking into account the demonetisation, and has taken a less severe impact of cash crunch than what was estimated by various analysts, including former Prime minister Manmohan Singh and the International Monetary Fund.
In fact, the IMF had said that growth will be down by a full percentage point and Dr Singh had warned a knock off impact of 2 percent on the GDP.
The GDP had grown by 7.9 per cent in 2015-16. But the Survey has admitted its estimates may not have fully captured the impact of demonetisation as it does not record activity in the informal sector, where a majority of Indians are employed.
“But the costs of demonetisation have nonetheless been real,” it said. The Survey said that interest rates and dampened price pressure may have cushioned the short-term macro-economic impact. The Survey was upbeat as it hoped that remonetisation will eliminate the squeeze by April.
“About 90 per cent of transaction demands can be met before the end of the year,” it said. The survey added that consumption is expected to receive a boost from two sources: a catch-up after demonetisation-induced reduction in the last two quarters of 2016-17; and cheaper borrowing costs, which are likely to be lower in 2017 than 2016 by as much as 75 to 100 basis points. “As a result, spending on housing and consumer durables and semidurables could rise smartly,” said the Survey.
