Impact of note ban unlikely to show in advance GDP estimates

NEW DELHI: Advance growth estimates for 2016-17, which will be released on January 6, are unlikely to capture impact of the demonetisation drive as they will be based on data prior to November, a senior statistics ministry official said.

The government had on November 8 announced cancellation of legal tender of Rs 500 and Rs 1,000 notes. The only official output statistics for November as of now is of the core sector, up 4.9% in the month, down from 6.6% in the month before.

"It is too early to capture demonetisation in the growth numbers because we have data till October based on which we will estimate growth," the official said.

The index of industrial production (IIP) data is one of the key inputs into GDP estimates, but as of now IIP data is only available till October. Data for the month of November will be released in the second week of January.

The subsequent estimates will reflect the impact of demonetisation. "The impact of such sweeping changes comes with a lag so the estimates that come later will reflect it," the official added.

Hence, there will be no explanation or note mentioning demonetisation in the upcoming estimate Previously, data was released around February 7. The release has been brought forward by a month as the Union Budget itself will be now presented on February 1 — a month ahead.

The advance estimates of the CSO are needed by the finance ministry to calculate the deficit numbers and also estimate the GDP for the next year.