Union Finance Minister Arun Jaitley on Thursday stated that the demonetisation decision has rubbed off little effect on the dipping Gross Domestic Product (GDP) numbers.
The 2017 GDP numbers for the fourth quarter (January to March) were 1.9% lower as compared to the same time last year. The country grew at 7.1% in 2016-17.
Major sectors like manufacturing, services and construction slowed down considerably in the final quarter. Here are the figures and supporting stats.
Manufacturing Maniac
The Gross Value Added (GVA) in this sector dropped to a mere 5.3% in Q4 of 2016-’17 from 12.7% in Q4 of last year.
Sure, demonetisation left a void in the economy, there was an economic slowdown as companies weren’t have enough cash funds to process their production and pay the labor. On the other hand, the public was also facing major cash deprivation due to stringent withdrawal limits. This led to further plummeting of consumption rate in the economy.
Construction Curse
In Q4, construction shrank by 3.7% compared to same period last year. Bank credit to industry slowed down to 4.3% in December 2016 from 4.9% in the previous 12 months ago.
The demonetisation wave set a major setback for real-estate companies which could not deal with cash transactions but only receive payments through bank or cheque.
Informal sector
GDP number do not show an inclusive picture of the informal sector as GDP only covers formal sectors. This is the reason why the informal sector cannot be judged by the GDP numbers. As a matter of fact, more than 75% of India’s workforce is employed in the informal sector.
FM Jaitley drove attention to the greener side of the situation. Jaitley claimed that a 7- 8% annual growth was “very good” as per global standards.
Furthermore, the final rollout of GST will engender greater possibilities of business growth, he added.
