Economic growth slowed to 7.1 per cent in FY17, a year in which 87 per cent of currency was demonetised.
New Delhi: Chief Economic Adviser Arvind Subramanian today said the GDP growth is expected to further pick up by 0.75 per cent this fiscal on the back of policy support including macroeconomic measures.
"Overall, my sense is that the economy could do with all the policy support it could to bring it back to full potential, especially, all the macroeconomic instruments that should be deployed to get the economy back to its full potential," he said while reacting to subdued GDP number of 7.1 per cent for 2016-17.
India's economic growth slowed to 7.1 per cent in 2016-17, the year in which 87 per cent of the currency was demonetised, despite a very good show by the agricultural sector.
"It is true that this year, over the four quarters, there has been a deceleration in the growth of economic activity, which according to both the IIP and National Income accounting data, the deceleration has been happening since July," he
He said that demonetisation had made a temporary impact on the economy but it should get better as remonetisation progresses. "I think, we can see some signs of bottoming out and a recovery in the nominal aggregates which, in fact, did pick up in the fourth quarter," he said.
"The projection for next year is certainly a pick up by about half a basis point. We said relative to this year it would pick up by about 50-75 basis points. I think I would stick with that projection for next year. The economy should be picking up," he said.
On the fourth quarter growth of 6.1 per -- the slowest in three years -- Subramanian said, "It is quite consistent with what we expected in the survey because we said that if you did the arithmetic on the monetary aggregates in the fourth quarter, you would see it bottoming out and that, after all, is because of a temporary shock of demonetization. The economy could recover as remonetization is happening and since that's picked up pace, it should start perking up from now on."
On interest rate, he said that it is up to the RBI to decide. "As I said, the econmy could do with all the macro economic policy support that can be provided," he added.