India growth rate slips to 7% in Q3 after cash ban

New Delhi : India's economic growth rate slipped to seven percent in the third quarter of the financial year after the controversial ban on high-value banknotes in November, official figures showed Tuesday.

Gross domestic product in one of the world's fastest growing economies expanded 7.0 percent year-on-year in the three months to the end of December, down from 7.3 percent in the previous quarter, data published by the central statistics office showed.

While growth came in lower than the previous quarter, it exceeded most analyst predictions in the wake of the government's shock move to remove all 500 (around $7.50) and 1,000 rupee notes from circulation immediately.

Prime Minister Narendra Modi has defended his so-called demonetisation scheme as a necessary strike against corruption and a way of boosting tax revenues by dissuading people from doing business in cash.

But the move triggered massive lines outside banks in the weeks afterwards as authorities struggled to print replacement notes fast enough. 

Chief statistician T.C.A Anant said after the data was announced that it was difficult to assess the full impact of demonetisation, which the government had already acknowledged has hit growth.

"Policies like demonetisation are very difficult to assess without a lot of data," Anant told a press conference.

"We will keep evaluating the numbers. I will not like to draw any conclusions at this stage."

Anant said some sectors such as agriculture and mining had in fact performed better than expected in the third quarter.

"The only two sectors in which it is distinctly worse is finance and the real estate category," he added.