Even after the demonetization the notes ban, India still remain the world's fastest growing economy. GDP or gross domestic product growth however fell to 7 percent in the October-December quarter, from 7.4 in the previous quarter, with Prime Minister Narendra Modi's surprise decision on November 8 to scrap 500 and 1,000-rupee notes or around 86 per cent of the currency then in circulation, putting economic activity on the skids in a predominantly cash-reliant economy. China was number 2 with its economy growing at 6.8 percent in the December quarter.
Economic Affairs Secretary Shaktikanta Das said "There was just a temporary impact of demonetization, which is over now. There was an overestimation of the effect of demonetization by some. It is satisfying to note that this was not true. We still remain a 7 per cent-plus GDP country."
The CSO or the Central Statistics office retained its growth forecast for the fiscal year ending in March 2017 at 7.1 percent. The GDP estimate of economist had forecast 6.4 percent growth for the October-December period.
The CSO's forecast for the year is higher than that of the International Monetary Fund or IMF, which has revised its estimate down to India's growth in the year ending March 31, 2017, to 6.6 per cent from 7.6 per cent earlier. But the IMF expects India's economic growth to rebound to 7.2 percent in 2017-18.
Upasna Bhardwaj, senior economist at Kotak Mahindra Bank said "The GDP estimates significantly overshoot the expected figures and that's why I feel that the overall impact of demonetization has still not been factored into these estimates. I expect the impact of demonetization to linger on for at least another quarter or so, and based on that, I feel that the final GDP numbers would be significantly lower."
The economy had grown at 7.2 per cent and 7.4 per cent in the first quarter (April-June) and second quarter (July-September) of 2016-17 respectively.
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