Q3 GDP growth of 7% negates the impact of demonetisation

The Dollar Business Bureau

Delighted at the GDP figures, the Ministry of Finance said that the growth of 7% in the third quarter has refuted negative speculations and projections about the impact of demonetisation on growth.

Shaktikanta Das, Economic Affairs Secretary, said that the growth in the third quarter and the projected growth of 7.1% for entire fiscal are noteworthy.

“The overestimation that was done about the so-called negative impact of demonetisation it is very satisfying to know that it is not there. Because we still remain 7% plus growth country. The third quarter GDP numbers are out and as you have seen the numbers completely negate the kind of negative projections and speculations made about the impact of demonetisation,” Das told reporters in New Delhi.

“We have said earlier that most of the projections were anecdotal, and are not based on the facts. There were some reports that said the manufacturing activity in several sectors were hit because of demonetisation but as we see now from the figures that the growth in the manufacturing sector is at 8.3%, which is a very satisfactory and promising number,” Das added.

The remonetisation process has progressed well and it was completed on Tuesday, Das said, while adding that there is no complaint from the banks regarding a shortage of cash. Complaints of ATMs falling short of cash is being managed by the Reserve Bank of India (RBI), Financial Services Department and the individual banks by supplying notes he said.

He further said that the demonetisation impact, coupled with the Goods and Services Tax (GST) and a number of reforms that the government has undertaken seems very promising.

“Apparently, the real estate sector has not progressed so well. This is not a satisfactory figure but we have to keep in mind that the real estate sector is itself going through an important structural reform. Going further we should see developments in the sector,” Das said.

The demonetisation impact was short-term and was limited to consumption, he added.