Note ban blues: NCAER lowers our country's GDP growth forecast to 6.9% from 7.6%

The National Council of Applied Economic Research (NCAER) has lowered the country's growth forecast to 6.9 per cent for the current fiscal on account of demonetisation. A few days before demonetisation was announced, NCAER had projected a growth rate of 7.6 per cent for 2016-17. "The removal of the legal tender status of high value currency notes (Rs 500 and Rs 1,000) with effect from the midnight of November 8, took the domestic economy by surprise, raising fresh anxieties about economic recovery, leading to a downward forecast. Global economic uncertainty has added to these concerns," NCAER said in a statement.

The growth rate would rebound to 7.3 per cent for 2017 18. The Gross Value Added (GVA) at Basic Prices at constant (2011 12) prices is predicted to grow at 6.3 per cent in 2016 17 and 7 per cent in 2017 18, it said. Real Agriculture GVA is forecast to grow at 3.7 per cent, real Industry GVA at 5.5 per cent and real Services GVA at 7.3 per cent in 2016 17, it said. Wholesale Price Index (WPI) inflation is projected at 3.6 per cent for 2016 17. Inflation is projected to accelerate in 2017 18 due to rising crude oil inflation, it added.

NCAER estimates suggest that the total foodgrain production is going to touch a record of 272 million tonnes, 8 per cent higher than the corresponding figure of 251.6 million tonnes harvested last year. The growth of the industrial sector remained lacklustre, it said, adding the overall Index of Industrial Production (IIP), a measure of industrial performance in the country, shows a growth of 0.3 per cent during April December 2016 17, against 3.2 per cent growth recorded during the same period of 2015 16.