DeMon high growth mystery

The latest GDP estimates, suggesting that consumption shot up during the December quarter when companies were reporting a steep drop in sales, may not have captured the impact of demonetisation on the economy properly as the activity in the informal sector was not accurately accounted for, economists said. The second advance estimates released by the Central Statistics Office had estimated that private final consumption expenditure, a gauge for consumption demand, grew at over 10% during October-December, compared to half that rate in the preceding three-month period.

The numbers have raised fresh doubts over the way CSO captures economic activity as companies such as FMCG players and durables firms had reported a steep fall in sales in the weeks after demonetisation.

A part of the reason for this gap may be CSO's inability to capture trends in the unorganised sector, where anecdotally, the impact is seen to be greater.

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