Arvind Subramanian Chief Economic AdvisorChief Economic Advisor Arvind Subramanian on Wednesday said gross domestic product (GDP) growth was expected to further pick up by 0.75 per cent this financial year on the back of policy support, including macroeconomic measures.
“Overall, my sense is that the economy could do with all the policy support it could to bring it back to full potential, especially, all the macroeconomic instruments that should be deployed to get the economy back to its full potential,” he said while reacting to subdued GDP number of 7.1 per cent for 2016-17.
India’s economic growth slowed to 7.1 per cent in 2016- 17, the year in which 87 per cent of the currency was demonetised, despite a very good show by the agricultural sector.
“It is true that this year, over the four quarters, there has been a deceleration in the growth of economic activity, which according to both the IIP (Index of Industrial Production) and National Income accounting data, the deceleration has been happening since July,” he said. He said that demonetisation had made a temporary impact on the economy but it should get better as remonetisation progresses.
“I think, we can see some signs of bottoming out and a recovery in the nominal aggregates which, in fact, did pick up in the fourth quarter,” he said.
“The projection for the next year is certainly a pick-up by about half a basis point. We said relative to this year, it would pick up by about 50-75 basis points. I think I would stick with that projection for the next year. The economy should be picking up,” he said.