The Central Statistical Office surprised the nation on Tuesday evening when it released advanced estimates of Gross Domestic Product growth for the October-December quarter. Despite widespread economic disruption caused by the Union government’s demonetisation move on November 8, the GDP figures have registered a robust growth of 7% in the third quarter. This defies predictions by most economists that weak consumption would drag the rate down well below that figure.
GDP when measured by expenditure method is obtained by adding private consumption expenditure, government consumption expenditure, investments and net exports (imports minus exports). The private consumption expenditure forms a bulk of the GDP measured through this method and this is what has grown by 10% in Oct dec period .
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This when 86% of all valid currency notes were demonetised on November 8 and Indians were under tremendous pressure from arbitrary limits on bank and ATM withdrawals. How did people consume so much when there was an acute scarcity of cash?
I forgot they went on this spending binge by taking loans ,after all it is not necessary that people spend their hard earned money on consumption they can also take loans…… right?
Oops even growth in retail loans collapsed during oct-dec perios
So my guess is there is preponement of future purchases out of cash remaining with household. if it is true then it is clearly a case of upfronting the GDP