Business

Modi’s demonetisation to hit GDP: Growth to fall to 6.3% from 7.1% in FY17, says HSBC


New Delhi, Jan 9 (PTI) : Foreign brokerage HSBC today projected sharply lower growth numbers for the year at 6.3 per cent, way lower than the official CSO estimate of 7.1 per cent for 2016-17. The Central Statistical Organisation (CSO) had over the weekend released GDP estimates wherein it had pegged growth at 7.1 per cent for 2016-17, lower than 7.6 per cent in the previous fiscal year. The CSO said it did not calculate the impact of the note ban on economic growth.

The HSBC report, penned by its chief India economist Pranjul Bhandari noted that the GDP projection “is not of much significance because the CSO has used inputs used for until September/October, which is well before the November 8 demonetisation”.

This is surprising, said the report, as “CSO had access to some post-demonetisation data for banking, it chose to stick to data till October. As such the CSO estimate does not carry the full extent of the drag to activity inflicted by demonetisation”.

As per the report, taking into account cash elasticity of GDP, economy is likely to grow at 6.3 per cent in 2016-17.

“It is not mandatory for the Ministry of Finance to use the CSO advance estimates. We expect it to use a lower real growth estimate that takes into account data released since demonetisation,” Bhandari said.

Further, she noted that the government data on inflation, industrial production, car sales and trade details, etc are expected to be released in the coming days, will give a clearer picture of the unfolding impact of demonetisation.

“We expect lower inflation (primarily led by food prices), weaker industrial growth and a narrower trade deficit,” Bhandari said.

According to her, the CPI inflation is likely to fall further to 3.3 per cent in December from 3.6 per cent in November, as falling food prices may offset increase in oil prices. Besides, WPI inflation may lower to 2.9 per cent in December from 3.2 per cent in the preceding month, in 2016. The brokerage has estimated industrial production to grow at 0.5 per cent in November versus negative 1.9 per cent in October.

Comment on this article

  • Vincent Rodrigues., Frazer Town,Bangalore

    Tue, Jan 10 2017

    Demonetisation has really effected the Indian growth and progress over and above the hardship to the common man when the return is not on expected line.

    DisAgree Agree [1] Reply Report Abuse

  • Krishna, karkala

    Tue, Jan 10 2017

    HSBC is a Swiss bank of India. It is a safe haven for black money holders. They know the loop holes transfer money to overseas account.

    DisAgree [1] Agree Reply Report Abuse

  • Agee, Indian - UAE

    Mon, Jan 9 2017

    In my opinion below 5.... All depends on public behavior in coming days...

    DisAgree Agree [9] Reply Report Abuse

  • SMR, Karkala

    Mon, Jan 9 2017

    In 1991, when Singh swore in as finance minister in the Congress government led by P V Narasimha Rao, Indian economy was in shambles. India's fiscal deficit was close to 8.5 per cent of the gross domestic product (almost double of the current fiscal deficit). The balance of payments deficit was huge and the current account deficit was close to 3.5 per cent of GDP. None of India's financial lenders were willing to finance it. India had close to billion dollars in foreign exchange (forex) reserves (todays forex reserves stand a $292.31 billion[1]) - which was equal to almost two weeks of imports. India was on the verge of defaulting on the repayments of it's international loans.

    In short the country was on the verge of bankruptcy.

    Manmohan Singh was the man who ushered in the reforms that liberalized India's economy, changing the fundamental way that in corporate India thinks and with it the lives of millions of middle class Indians.

    The brilliant handling of economic crisis in 1991 and 2008 legacy of Manmohan Singh will be remembered forever.

    Jai Hind

    DisAgree [3] Agree [48] Reply Report Abuse

  • Anand, Karkala

    Mon, Jan 9 2017

    Enjoyed everything under corrupt government, nothing more we want to listen, we want only digital, GDP will see its upward trend after a decent planning. 60 years of slavery and people still love to have that.

    DisAgree [64] Agree [8] Reply Report Abuse

  • kp, mlore

    Mon, Jan 9 2017

    Do you think Indians are 'free' under BJP? or were ever 'free' even before 1947?

    DisAgree [2] Agree [23] Reply Report Abuse

  • Pratap Rao, Bangalore

    Mon, Jan 9 2017

    How can the bhaktas still not see reality? Are they blind? The country is in a serious crisis. Surely the Congress managed both the economy and foreign relations better than the BJP. Manmohan is an intellectual of high order. Modi is an ideologue. Country needs intellectuals and not ideologues

    DisAgree [5] Agree [67] Reply Report Abuse

  • geoffrey, hat hill

    Mon, Jan 9 2017

    Leaving aside the usual tall and empty claims, is there a single positive outcome of this DeMo that can be substantiated by facts and figures? If the nose diving rupee value ( 1$ = 68.13 as of now) is any indicator, tough times are ahead for sure.

    DisAgree [2] Agree [35] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Jan 9 2017

    My final figure is 5.2% ...

    DisAgree [4] Agree [46] Reply Report Abuse

  • Deepak Suvarna, Udupi

    Mon, Jan 9 2017

    Soon one more U turn

    DisAgree [3] Agree [37] Reply Report Abuse

  • Chandrashekar, Mangalore

    Mon, Jan 9 2017

    Ha ha ha feku speeches no longer work

    DisAgree [2] Agree [18] Reply Report Abuse

  • Bhaksala, Mangalore

    Mon, Jan 9 2017

    can any one explain the implication of floating a long term debt in a potently inflationary market like India ..awaiting your answer please

    DisAgree [1] Agree [16] Reply Report Abuse

  • prem, moodbidri

    Mon, Jan 9 2017

    What is the problem if GDP Growth fall to 6.3% from 7.1% in FY17 ??? In FY18 it will improve tremendously, US dollar will fall to 30 rupees, we can buy petrol for 20 rupees per litre, everyone will have lakhs in their bank accounts, people can order whatever they wish using their finger tips sitting at home... bla bla bla... (murmur by a a die hard Bhakth)

    DisAgree [2] Agree [20] Reply Report Abuse

  • Ashok Shetty, shirva

    Mon, Jan 9 2017

    Next Slogan HSBC Mukth Bharat.

    DisAgree [2] Agree [22] Reply Report Abuse

  • ABDUL RAFIQ, UCHILA

    Mon, Jan 9 2017

    Nooo...HSBC is anti national and agent of British govt...lol...

    DisAgree [3] Agree [44] Reply Report Abuse

  • shaan, ksa

    Mon, Jan 9 2017

    One more step towards DIGITAL INDIA..

    JAI HIND

    DisAgree [6] Agree [26] Reply Report Abuse

  • j.anata, Mangaluru / Bengaluru

    Mon, Jan 9 2017

    Why the glee?
    Looks like you want INDIA to fail!

    DisAgree [19] Agree [2] Reply Report Abuse

  • geoffrey, hat hill

    Mon, Jan 9 2017

    Glee? No way, it’s more of self pity. When renowned economists like R3, Amarthaya Sen, Paul Krugman, Kenneth Rogoff and Larry Summers predicted this, they all seemed biased in their opinion to you guys and you allowed yourselves to be carried away by emotion packed monologues and theatrics, ab jhelo.

    DisAgree [1] Agree [19] Reply Report Abuse

  • prem, moodbidri

    Mon, Jan 9 2017

    jai ho...

    DisAgree [9] Agree [13] Reply Report Abuse

  • Anees, KARKALA

    Mon, Jan 9 2017

    Who is responsible????

    DisAgree [3] Agree [28] Reply Report Abuse

  • Jenifer, Mangalore

    Mon, Jan 9 2017

    60 years of misrule - he he he

    DisAgree [33] Agree [5] Reply Report Abuse

  • Harsha, Mangalore

    Mon, Jan 9 2017

    60 years of misrule couldn't screw. our country. But 2 & 1/2 year of worst rule did so..... hahahahahaha

    DisAgree [2] Agree [56] Reply Report Abuse

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Title : Modi’s demonetisation to hit GDP: Growth to fall to 6.3% from 7.1% in FY17, says HSBC


 
 
 
 

 
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