News Worms
News Worms


GDP growth estimated at 6.5%

GDP growth estimated at 6.5%

Manufacturing sector growth has been forecast at 4.6% in 2017-18, compared with the 7.9% expansion provisionally estimated for 2016-17.

According to the first advance estimates released by the Central Statistical Office, agriculture, the mainstay of the country's economy, is expected to grow at 2.1% this year.

The Indian economy is expected to decelerate to 6.5% in 2017-18 from 7.1% in the previous year, marred by the twin policy blow of demonetisation and hasty implementation of the goods and services tax (GST). The per capita income in real terms (at 2011-12 prices) during 2017-18 is likely to attain a level of Rs 86,660 as compared to Rs 82,269 for the year 2016-17, it said.

ICRA expects GVA growth to reach 7.5% in the last quarter of the fiscal and full-year GDP growth of 6.7%, higher than these first estimates.

Growth in gross value added (GVA) - a broad measure of the value of all goods and services produced in the economy that strips out the impact of taxes and subsidies - also slowed to 6.1 per cent, sharply lower than the RBI's estimate of 6.7 per cent. "Implicit calculation suggests growth in the second half of 2017-18 will be better thatn the first". GVA growth for construction is estimated at 3.6 per cent, up from 1.7 per cent a year ago, the CSO's advance estimate showed.

The ministry projects manufacturing growth for the whole financial year to slow down to 4.6% from 7.9% last year, along with growth in agriculture, forestry and fishing expected to drop to to 2.1% from 4.9% during the same period last year.

"Even the current GDP forecast of 6.5 per cent is likely to be hard to attain, given that growth in the first half was just 6 per cent", Rao added. The latest data comes weeks before the union budget for 2018-19 is presented in Parliament on February 1 and is expected to put pressure on the government to step up spending in key sectors such as the farming.

This may affect the fiscal deficit, which the government had hoped to cap at Rs 5.46 lakh crore this year. "For FY 2018 as a whole, we continue to expect GVA and GDP growth to print at 6.5% and 6.7%, respectively, higher than the advance estimates of 6.1% and 6.5%", she said.

The CSO has primarily used seven-month data to extrapolate for the full fiscal. Therefore, they are not fully factoring in the expected pickup in growth in the later months of FY2018, related to a favourable base effect and a "catch up" following the subdued growth momentum in H1 FY2018. "Assuming that budgetary targets will be met, which gave a fiscal deficit of 3.24 per cent, our figures estimate it to be at 3.29 per cent, which rounding off becomes 3.3 per cent", he said.

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