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State Bank of India pegs economy growth at 6.1%, much lower than govt estimates

SBI’s think tank Ecowrap, estimates that the growth will be 6.1% in the third quarter of 2016-17, lower than the government estimates. In the fourth quarter, the think tank pegs it at 7.8%.

business Updated: Jan 16, 2017 17:07 IST
GDP,State Bank of India,Demonetisation
Growth in the manufacturing and construction sectors is expected to decelerate from last year.(Livemint)

An analysis by the State Bank of India think-tank SBI Ecowrap showed that the government’s estimate of 7.8% growth in the nation’s economy is unrealistic, even though there has been a spurt in tax revenue, which also counts collections from the income disclosure schemes.

More than a week ago, advance gross domestic product (GDP) estimates released by the Central Statistics Office estimated India’s economic growth at 7.1%.

Ecowrap, however, estimates that the growth will be 6.1% in the third quarter. In the fourth quarter, the think tank pegs it at 7.8%.

Experts, differ on SBI’s estimates.

“This means that the impact of demonetisation has been possibly somehow reflected in the third quarter data, but the 7.8% in the fourth quarter is quite unrealistic,” says the publication, anchored by the SBI Group’s Chief Economic Advisor Soumya Kanto Ghosh.

According to Ecowrap, jump of 1.7% between two successive quarters is unprecedented, except once in 2012-13, due to a change in base year.

On the GDP data numbers from the Ministry of Finance Ministry, the think tank says: “We believe that the recent spurt in direct and indirect tax collections is also clearly attributable to collections on non-petro products and the collections from the income disclosure scheme.”

The analysis shows that by adjusting the tax at 45% of the proceeds from the scheme, the personal income tax collections would have still expanded by 16.7% to Rs 2.2 lakh crore -- sign of a healthy trend.

The think tank has also sought to analyse the reasons behind a 43.1% in excise duty collections. Calling it the most defining collection, it says 15.4% could be the result of fuel prices, the remaining (27.7%) has to come from other components, which might include cement, auto, iron and steel, and gems and jewellery.

The report also sighted that purchases went up as people wanted to exhaust demonetised notes, leading to a spurt in the November numbers.

(Inputs from IANS)


First Published: Jan 16, 2017 17:07 IST