Skip to main content

India's demonetization "pain" coupled with GST "anxiety" back to the fore following 5.7% GDP growth: Crisil

Nuances of GDP-1
By Our Representative
Following one of the lowest Gross Domestic Product (GDP) growth rates in recent years, 5.7%, in the second quarter of the financial year 2017-18, India’s top rating agency, Crisil, has said that this has brought “demonetisation pain” and goods and services tax (GST) “anxiety” again the fore.
Based on data from the Central Statistical Office (CSO), Government of India, released on Thursday, Crisil says, “Crucially, the government has also revised down gross value added (GVA) growth for the fourth quarter of last fiscal by 50 basis points (bps) to 5.6%, suggesting that the impact of demonetisation on the economy was more than earlier estimated.”
Carried out by chief economic Darmakirti Joshi and economist Adhish Verma, the analysis said, the “slid to 5.7%” in the last quarter “from 6.1% in the same quarter last fiscal” suggests “slowdown”, which is corroborated “with corporate results for the first quarter, which had shown net profits declining for chunk of listed firms.”
The experts add, “The computation of GDP relies heavily on corporate data from the Ministry of Corporate Affairs database. The slowdown reflects sharp deceleration in exports of goods, and some moderation inconsumption growth.”
Nuances in GDP-2
According to Crisil, GVA growth, or the supply-side GDP, which is supposed to be a “truer estimate of underlying economic activity as it doesn't take into account the impact of taxes and subsidies, grew 5.6% in the first quarter, same as in the fourth quarter of last fiscal, but down from 7.9% on-year.”
“The fact that GVA growth in the first quarter was the same as in the fourth quarter suggests waning demonetisation impact was offset by rising anxiety over the GST”, it adds.
“Industrial growth in the first quarter was down to 1.6% compared with 3.1% in the previous quarter, on account of a sharp slowdown in manufacturing growth (1.2% vs 5.3%) and de-growth in mining (-0.7% vs 6.4%)”, the top rating agency says.
The slowdown in industrial growth, says Crisil, was “arguably on account of GST uncertainty, which lead to destocking by retailers and slowdown in the production process.”
The experts further say, “Agricultural growth in real terms, too, slowed to 2.3% from 5.2% in the fourth quarter. Here, it is important to note that despite real growth of 2.3%, nominal agricultural growth was only 0.3%, suggesting that while agricultural output grew, their prices fell.” Real growth is derived by stripping the price impact from nominal growth.
Uptick in investment: "Bodes will for future growth"
Pointing out that it is only the services sector which “anchored overall GVA growth, rising 8.7% from 7.2% on-year”, Crisil says, this was “driven by improvement in two sectors -- trade, hotels, transport and communication, and financial, real estate and professional services.”
Pointing out that “there was mild improvement in investment growth (to 1.6% vs 2.1%, on-year, which pulled up the share of fixed investments to 29.8% from 28.5%”, and this “may be reflective of optimism in the growth recovery in the second half”, Crisil, however, says, “Outlook In an environment of subdued global growth and week investments, India’s GDP cannot grow fast in the short run.”
Hence, Crisil says, it has decided revise its GDP growth forecast down from 7.4% stated earlier for the fiscal 2017-18, though adding, “That said, normal monsoon, softer interest rates and inflation, and pent-up demand (demand postponed due to the demonetisation) will support consumption growth in the remaining quarters.”

Comments

TRENDING

Insider plot to kill Deendayal Upadhyay? What RSS pracharak Balraj Madhok said

By Shamsul Islam*  Balraj Madhok's died on May 2, 2016 ending an era of old guards of Hindutva politics. A senior RSS pracharak till his death was paid handsome tributes by the RSS leaders including PM Modi, himself a senior pracharak, for being a "stalwart leader of Jan Sangh. Balraj Madhok ji's ideological commitment was strong and clarity of thought immense. He was selflessly devoted to the nation and society. I had the good fortune of interacting with Balraj Madhok ji on many occasions". The RSS also issued a formal condolence message signed by the Supremo Mohan Bhagwat on behalf of all swayamsevaks, referring to his contribution of commitment to nation and society. He was a leading RSS pracharak on whom his organization relied for initiating prominent Hindutva projects. But today nobody in the RSS-BJP top hierarchy remembers/talks about Madhok as he was an insider chronicler of the immense degeneration which was spreading as an epidemic in the high echelons of th

Central pollution watchdog sees red in Union ministry labelling waste to energy green

By Chythenyen Devika Kulasekaran*  “Destructors”, “incinerators” and “waste-to-energy (WTE) incineration” all mean the same thing – indiscriminate burning of garbage! Having a history of about one and a half centuries, WTE incinerators have seen several reboots over the 19th, 20th and 21st centuries. 

First-of-its-kind? 'Eco-friendly, low cost' sewage treatment system installed in Gujarat

Counterview Desk Following the installation of the Unconventional Decentralized Multi-Stage Reactor (UDMSR) for sewage treatment, a note on what is claimed to be the  first-of-its-kind technology said, the treated sewage from this system “can be directly utilized for agricultural purposes”, even as proving to be a “saviour in the times of water crisis.”

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Indo-Bangla border: Farmers facing 'illegal obstacles' in harvesting, transporting yields

  Counterview Desk  In a representation to the chairperson, National Human Rights Commission, human rights defender Kirity Roy, who is secretary, Banglar Manabadhikar Suraksha Mancha (MASUM), has said that Border Security Force (BSF) personnel are creating "illegal obstacles" for farmers seeking to harvest their ripened yields and transport them to the market in village Jhaukuthi of Cooch Behar district.

Wasteland, a colonial legacy, being used to 'give away' vast tracts to Ratnagiri refinery

By Fouziya Tehzeeb* William D’Souza, a 55-year old farmer from Kuthethur, Mangalore, was busy mixing cattle feed when we arrived at his doorsteps. Around 25 km from the bustling city of Mangalore, Kuthethur is a lush green village with thick vegetation. On the way to William’s house the idyllic view gets blocked by the flares and smoke arising from the Mangalore Refinery and Petrochemicals Limited (MRPL).

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

CAA disregards India's inclusive plural ethos, 'betrays' ideals of freedom struggle: PUCL

Counterview Desk    "Outraged" at the move of the Central government to implement the Citizenship Amendment Act, 2019 (CAA 2019) weeks before the election, the top rights group, People's Union for Civil Liberties (PUCL), has demanded that the law be repealed. 

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Sections of BSF, BGB personnel 'directly or indirectly' involved in cross border smuggling

By Kirity Roy*  The Border Security Force (BSF) of India and the Border Guard Bangladesh (BGB) of Bangladesh met for 54th Director General level meeting at Dhaka, Bangladesh, on 5th to 9th March, 2024 to discuss on minimizing killings at border area, illegal intrusion, trafficking of drugs and other narcotics, smuggling of arms and ammunitions and other crimes at bordering areas. Further, the summit had an agenda to discuss on overall development in 150 yards area at both sides of the border and design an activity plan for the same.