What could be the rate of growth?
To capture the impact of demonetisation on the unorganised sectors of the economy one needed to conduct surveys between November 2016 and January 2017. A later survey cannot capture what happened during that period. So, government statistics will never reflect what happened in that period.
Luckily, various private surveys were carried out during the period of severe impact from demonetisation and they reported a consistently dramatic decline of between 60-80% in the unorganised sectors of the economy and an increase in unemployment. This is significant since 93% of the workforce is in this sector. All this led to a drastic fall in demand.
According to the RBI, capacity utilisation in the organised industry was low and hovered between 70-75%. There is no data on capacity utilisation in unorganised industry. All this impacted investment adversely and that slows down growth of the economy, way beyond the immediate period of currency note shortages. It is this slowdown that is manifesting itself in the economy even though the data does not show it.
While there is no substitute for government surveys, what data is available from private surveys suggests that the rate of growth of the economy turned negative during the severe phase of demonetisation. It possibly recovered somewhat after January 2017 but it has again declined after June when the GST-related impacts came into play.
This conjecture of a near zero growth is supported by the decline in the credit off-take from banks, fall in employment in the organised sectors of the economy, rise in demand for work under the MGNREGA scheme and the decline in investment in the economy.
Credit off-take declined to a historic 60-year low during demonetisation and further to negative growth in July and August 2017. This reflects the fall in production and investment. This near zero growth is the real cause of worry, which would not be the case if the rate of growth was 5.7%.
The government cites international agencies that also show India growing at near 6%. But these agencies do not collect independent data and use only government data with a bit of interpretation thrown in. They are not giving an independent assessment. It is like the blind leading the blind.