GDP growth to decline to 7.1%, predicts government

The government said on Friday that economic growth would slow down to 7.1 per cent in the fiscal year ending in March from 7.6 per cent a year earlier.

Most private economists have pared India's growth forecast to 6.3-6.4 per cent for the 2016-17 fiscal year, citing the impact of the government's scrapping of high-value bank notes last November, which they reckon would linger for one more year.

The predicted percentage would be the lowest in the last three years. In 2015-16, the GDP growth was 7.6 per cent and 7.2 per cent in 2014-15.

Meanwhile, former deputy chairman of the erstwhile Planning Commission Montek Singh Ahluwalia said that the demonetisation drive has disrupted the "underlying strength" of the economy, which is likely to see up to 2 per cent fall in growth at around 5 per cent.

"The country had an underlying strength for growth of over seven per cent, but demonetisation has disrupted that strength and I think GDP will get affected between 1 and 2 per cent. So now it should be 5 to 5.5 per cent for the current year," Ahluwalia said after a close-door meeting with members at the Bharat Chamber of Commerce.

He said the present government did not set any road-map for the long-term benefits out of note recall despite recognising the short-term pain.

(With inputs from agencies)