7-8% GDP growth reasonable, says Jaitley; India will regain fastest growing economy tag: NITI Aayog

India growing at 7-8 per cent is "fairly reasonable" in the current global context, Finance Minister Arun Jaitley said today while maintaining that the decline in fourth quarter GDP print cannot be attributed to demonetization alone. India lost the tag of the fastest growing economy to China in the March quarter with a GDP growth of 6.1 per cent, which pulled down the 2016-17 expansion to 7.1 per cent.

Jaitley said the slowdown in the fourth quarter was due to both domestic and global factors. "There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible given the global and domestic situation even prior to demonetization in the last year," Jaitley said while addressing media on completion of three years of the Modi government. "There was impact of global factors. There could be some impact in one quarter or two quarters of one particular factor (demonetization)...

"...if you look at the growth of some sectors, the 9-10 per cent growth that was normally in services, especially in the financial sector, has come down. The ability of banks itself was in question. So these are cumulative factors which played," he said. He added that a GDP growth rate of 7-8 per cent is reasonable by both global and Indian standards.

"I do believe that in the current global situation a 7-8 per cent growth, which is at the moment Indian normal, is fairly reasonable. "It is fairly reasonable level of growth by our own standard and very good by global standard. I see no reason that there would be adverse impact of GST on GDP. GST by itself should normally add to the growth," he said.

The government intends to roll out the Goods and Services Tax (GST) from July 1. On the issue of total deposits received during demonetization, the Finance Minister said the Reserve Bank is compiling data and will give the figure once the exercise is complete. "RBI as an important institution can't give approximations. Today every currency note has to be counted, if there is any counterfeit that has to be eliminated and real count has to come. It's an enormous exercise that RBI is doing. As soon as they complete it, they will give the accurate figure," he said.

With regard to shifting the financial year to January, Jaitley said the government has not decided on it yet. He also said the Centre will not provide any additional funds to states for undertaking farm loan waivers other than what has been recommended by the 14th Finance Commission. "They (states) have to do it from their own resources," he clarified. On privatisation of ailing national carrier Air India, he said Niti Aayog has already given its recommendations to the Civil Aviation Ministry to explore various options. "It is for the Civil Aviation Ministry to explore various options," he added. Oil companies merger issue is also being looked at by the concerned ministry, he added.

Niti Aayog confident of recovery: 

India will regain the crown of the fastest growing major economy, overtaking China, as early as the first quarter of 2017-18, NITI Aayog Vice Chairman Arvind Panagariya said today. India, on an annual basis, is ahead of China and will regain the growth momentum soon on the back of host of reforms initiated by the Modi government in the last three years, he said. India lost the tag to China in the March quarter with the GDP growth slipping to 6.1 per cent. China recorded a growth rate of 6.9 per cent during the January-March quarter.

However, on an annual basis, India grew by 7.1 per cent in 2016-17. "India will return to be the fastest growing major economy in the first quarter (April-June) of 2017-18. If we see 2016-17 fiscal year growth figure, we are ahead of China. On quarterly basis, we will regain the status in the current quarter," he told PTI when asked how soon India will regain the crown of fastest growing major economy in the world.

Panagariya further said that the growth will rebound in the current fiscal at a minimum of 7.5 per cent and accelerate further in the coming years. "Government has taken lots of reform measures. Our FDI is now around USD 60 billion. In the next two years -- 2018-19 and 2019-20 -- we will get to the 8 per cent growth trajectory," he said. India's growth slipped to a three-year low of 7.1 per cent in 2016-17 on account of poor performance of manufacturing and services sectors.

The GDP growth was at 8 per cent in 2015-16 and 7.5 per cent in the previous year. When asked if it was on account of demonetization of high value currency notes in November last year, Panagariya said that the declining trend was containing and note ban, at best, would have had only a "marginal impact". On November 9, 2016, the government had demonetised higher value currency which wiped off about 87 per cent of notes in circulation, leading to a severe cash crunch and disruption in the economic activities.