Despite odds, India remained among fastest growing major economies in 2016

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New Delhi, December 30
In the eventful year of 2016, Indian economy witnessed a lower growth rate in Gross Domestic Product (GDP) and higher inflation; but registered an impressive improvement in terms of Current Account Deficit, Trade Balance and Foreign Direct Investment (FDI) inflow.
According to data released by the Finance Ministry today, Indian economy registered 7.2 percent growth rate in the year 2016 which is lower by 0.4 percent in comparison of last year’s GDP growth rate of 7.6 percent. In inflation too, the economy suffered as the Consumer Price Index (CPI) remained high at 5.2 in comparison to 4.9 during the year 2015-16. Wholesale Price Index (WPI) too was registered high at 2.7 (during April-October) in comparison to last year WPI of -2.5 percent.
As per the revised Monetary Policy Framework, the Government has fixed the inflation target of 4 percent with tolerance level of +/- 2 percent for the period beginning from August 5, 2016 to March 31, 2021. The Government monitors the price situation on a regular basis as controlling inflation is a key priority and has taken a number of measures to control inflation especially food inflation. The steps taken include increased allocation of Rs 900-crore for Price Stabilisation Fund in the budget 2016-17 to check volatility of prices of essential commodities, in particular of pulses; creation of buffer stock of pulses through domestic procurement and imports; announcement of higher Minimum Support Prices so as to incentivise production; issue of advisory to States/UTs to take strict action against hoarding and black marketing under the Essential Commodities Act 1955 and the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980. The good news came from trade in the year 2016 as it showed improved trade balance in spite of export not rising at desired level. India’s merchandise exports (customs basis) declined by 15.5 per cent to 262.3 billion dollar in 2015-16. In 2016-17 (April-October), growth of exports declined by 0.2 per cent (154.9 billion dollar vis-?-vis 155.2 billion dollar in the corresponding period of previous year). During the year, imports too declined by 15.0 per cent to 381.0 billion in dollar 2015-16. Imports for 2016-17 (April-October) were at 208.1 billion dollar which is lower by 10.9 per cent as compared to 233.4 billion dollar in the corresponding period of previous year. During 2016-17 (April-October), trade deficit decreased to 53.2 billion dollar as against 78.2 dollar billion in the corresponding period of previous year. Significant market diversification were witnessed during the year in India’s trade from Europe and America to Asia and Africa in recent years ?a process that has helped in coping up with the sluggish global demand.
Due to decline in Imports, Current Account Deficit (CAD) narrowed down to 22.2 billion dollar (1.1 per cent of GDP) in 2015-16 as compared to 26.9 billion dollar in 2014-15. CAD narrowed down to 0.3 billion dollar (0.1 per cent of GDP) in 2016-17 (April-June) from 6.1 billion dollar (1.2 per cent of GDP) in corresponding period of the previous year. In the current fiscal 2016-17, foreign exchange reserves culminated to 372.0 billion dollar at end September 2016 which reduced to 366.2 billion dollar at end October 2016. Foreign exchange reserves stood at 365.3 billion dollar on 25th November 2016, showing an increase of 5.1 billion dollar over the level of 360.2 billion dollar at end-March 2016. Country’s foreign exchange reserves are at a comfortable position to buffer any external shocks. In the current fiscal 2016-17 (April-November), the average monthly exchange rate of rupee (RBI’s reference rate) was in the range of Rs. 66 ? 67 per US dollar (Rs. 66.47 per US dollar in April 2016 and Rs. 67.80 per US dollar in November 2016).
Good news too came on the external debt front as the India’s external debt stock stood at 479.7 billion dollar at end-June 2016, witnessing a decline of 5.4 billion dollar (1.1 per cent) over the level at end-March 2016. The external debt-GDP ratio was 23.4 per cent at end-June 2016, as against 23.7 per cent at end March 2016. The share of long-term external debt in total external debt increased marginally to 82.9 per cent at end-June 2016 from 82.8 per cent at end-March 2016. All external debt indicators show that India’s external debt has remained within manageable limits. India continues to be among the less vulnerable nations in terms of its key debt indicators. Agriculture and allied sectors registered a growth of 2.5 per cent during the first half of 2016-17 as compared to 2.3 percent during the same period in
2015-16.
As per the First Advance estimates (1st AE) 2016-17 released by Department of Economics and Statistics, production of Kharif food grains is estimated to increase to 135.03 million tonnes as compared to 124.01 million tonnes in 2015-16 (AE).

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