NITI Aayog vice-chairman Arvind Panagariya has said that the Indian economy will grow between 7 per cent and 8 per cent for 2016-17.
However, he said that he isn’t certain about hitting the 8 per cent GDP growth milestone over a full financial year by 2018-19.
“We are at about seven and a half per cent [now]. So, you know, I have been saying [growth this year would be] between 7 and 8 per cent. I still expect it to remain there. It should remain there,” Mr. Panagariya told The Hindu , while refusing to comment on the impact of demonetisation on the economy in the short or medium term.
“By 2019, we should certainly touch 8 per cent… I don’t know if for the full year of 2018-19, we will get 8 per cent or not, but I know by the end of it, (in the) third or fourth quarter, we should be touching 8 per cent,” the NITI Aayog vice-chairman said.
Mr. Panagariya explained that the Goods and Services Tax regime that the government hopes to roll out from April 1, 2017 “will lead to some disruption” in the beginning.
“Since it’s a new system that will be put in place, many companies which are not in the tax base would come into it. So there will be learning for both the government, who is implementing it and for firms,” he said.
India’s gross domestic product was estimated to have grown at 7.6 per cent in 2015-16, then the fastest in five years.
However, the first quarter of this fiscal year recorded 7.1 per cent growth as against 7.5 per cent for the same quarter of the previous year.
The Finance Ministry had attributed the lower growth in Q1 of 2016-17 to an increase in subsidies by 53 per cent which has resulted in lower growth of net indirect taxes.
“Investment has also not picked up in the recent quarters,” the Ministry said in a note to economic editors earlier this month.
In September, the NITI Aayog deputy chief had expressed optimism that a good monsoon could prop up growth and make it possible to cross the 8 per cent growth mark in this financial year itself.
Top Finance Ministry officials have also remarked in recent months that it is possible to get close to 8 per cent growth this year.