Gross Value Added (GVA) in the agriculture, forestry and fishery sector likely grew at 4.4 percent during the third quarter of 2016-17 financial year, and probably offset the effect of demonetisation on overall economic growth. The third quarter growth in the agriculture sector was higher than the GVA growth of 0.8 percent during the same period the previous year, according to the second advance estimates released by the Central Statistical Organisation (CSO).
According to CSO, the economy grew at 7 percent during the third quarter, and the full year is likely to end up with a growth of 7.1 percent at constant 2011-12 prices, against 7.9 percent growth of the previous year. Analysts had expected slower growth during the third quarter because of demonetization which was announced on 8 November last year.
Though there was a pick up in rabi sowing owing to good soil moisture following normal monsoons, farmers had reported they were unable to purchase inputs payable in cash. The cash crunch had also impacted prices at which they sold their produce. Agriculturist-sellers at Delhi’s Azadpur mandi had complained of a slump in prices. In Karnataka’s Sirsi taluk, a cooperative had stated its weekly cash disbursal to farmer members had sharply declined.
Analysis said the impact of demonetisation was felt acutely in the informal sector, which national accounts may not fully capture. “Policies like demonetisation are difficult to assess without a lot of data coming in,” Chief Statistician TCA Anant told the media.
While growth in agriculture got a bump up from the low base of the December 2015 quarter, growth in manufacturing was a surprise. It grew at 8.3 percent in the December 2016 quarter, up from 12.8 percent in the December 2015 quarter. Industry leaders like Rajiv Bajaj, Managing Director of Bajaj Auto, had said demonetisation had impacted sales. Domestic bike sales of Bajaj Auto had contracted by 11 percent in the December quarter, according to Mint. Bajaj had also said that workers had to be laid off.
Apart from agriculture, a nearly 20 percent growth in government expenditure had pulled growth rates up.
(Top photo of Chief Statistician TCA Anant, centre, addressing a press conference after release of FY 2017 third quarter GDP data. Photo courtesy PIB).