New Delhi: Chief Statistician of India TCA Anant opined that it cannot be attributed to demonetisation, but rather to normalization of the Wholesale Price Index (WPI).
"It is incorrect to hold demonetisation responsible for the slowdown of growth in the GDP. This is an effect of normalization of the WPI, coupled with a reduction in inventory in anticipation of the Goods and Services Tax (GST)," he said, while addressing a press conference here.
"Slowdown of the economy was witnessed after the second quarter last year itself. Demonetisation did not have any impact on demand, as shortage of cash declined from February. Having said this, it must be noted that India, in general, is moving towards a non-cash economy," added Anant.
With regards to the drop in manufacturing and production, Anant opined that companies built their strategies keeping the new tax regime in mind. Therefore, there was a reduction of inventory, which in turn affected the production figures for this quarter.
"Once companies begin to adopt the GST, inventories will go up and will be restored, keeping in mind the optimal inventory policy for corporates," he added.
With regards to the future trajectory of the WPI, Anant claimed that there might not be a further increase in the number, given a greater degree of convergence between CPI and WPI, maintaining levels of three to four percent.
India's economy unexpectedly slowed further to a three-year low after the Gross Domestic Product (GDP) in the first quarter (Q1) of 2017-18 was estimated at Rs.31.10 lakh crore, as against Rs. 29.42 lakh crore in the corresponding quarter of 2016-17, thus registering a growth rate of 5.7 percent.
Meanwhile, Quarterly GVA with basic price at constant (2011-2012) prices for Q1 of 2017-18 was estimated at Rs. 29.04 lakh crore, as against Rs. 27.51 lakh crore in Q1 of 2016-17, showing a growth rate of 5.6 percent, stated an official release published by the Central Statistics Office (CSO) on Thursday noted.