Demonetisation and the GDP: The growth conundrum

Contrary to expectations of growth slowing after demonetisation, GDP grew at a healthy seven per cent in the third quarter, with both consumption and investments rebounding. Analysts now expect growth to slow down in the fourth quarter, but key economic indicators paint a mixed picture. While, credit growth has plunged, PMI manufacturing and services have rebounded. Similarly cement production has contracted but steel production is robust. And, while two-wheeler sales continue to contract, the pace of contraction has moderated.