The government on Wednesday retained its estimate of GDP growth at 7.1 per cent for 2016-17, but with the economy reeling under the note-ban exercise last year, growth in the fourth quarter of the fiscal is projected at a mere 6.1 per cent.

According to the provisional estimates of national accounts released by the Central Statistics Office, growth in gross value added (GVA) at basic prices in 2016-17 is pegged at 6.6 per cent, against the advance estimate of 6.7 per cent. It was 7.9 per cent in 2015-16.

Despite the boost from the updated base year and baskets for the index of industrial production (IIP) and the wholesale price index (WPI), demonetisation seems to have impacted the economy: GDP growth in 2016-17 rose at the slowest pace since 2013-14, when it grew by 6.4 per cent.

For the fourth quarter, India lost the tag of the world’s fastest-growing economy as China’s GDP grew 6.9 per cent in that quarter.

For 2016-17, growth in GVA in all sectors barring construction and financial, real estate and professional services were revised upwards as compared to the advance estimates, while for these two sectors, it was scaled down.

However, TCA Anant, Secretary, Ministry of Statistics and Programme Implementation, said it was difficult to analyse policies like demonetisation on a post-hoc basis.

The data comes ahead of the second bi-monthly monetary policy on June 6 and 7, and the clamour for rate cuts is likely to continue.

“The impact of demonetisation is visible,” said DK Pant, Chief Economist, India Ratings.

Terming demonetisation as a temporary shock, Chief Economic Adviser to the Finance Minister Arvind Subramanian said he expected the economy to pick up by 60-70 basis points. “The 7.1 per cent growth is robust,” he said.

The growth rates for 2015-16 have been revised up to 8 per cent from 7.9 per cent while for 2014-15 to 7.5 per cent from 7.2 per cent.

Bearing the brunt of demonetisation, GVA growth in the third and fourth quarters of the last fiscal came in at 6.7 per cent and 5.6 per cent, respectively, against 7.3 per cent and 8.7 per cent a year ago.

In Q4, gross fixed capital formation, dipped 2.1 per cent although for the fiscal it grew 2.4 per cent. However, analysts see growth reviving this fiscal. Moody’s said the note ban would have limited impact, and the economy will grow 7.5 per cent in fiscal 2017 and 7.7 per cent in fiscal 2018.

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