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GDP at 6.5: Advance national income figures of Indian economy registers low

06 January 2018
GDP at 6.5: Advance national income figures of Indian economy registers low

Last year, real GDP growth was 7.1 per cent.

Briefing media persons here on Friday, Chief Statistician T C A Anant said that the next two quarters of the financial year will have a GDP growth of 7 per cent which will be better than the first two quarter of the fiscal.

The Gross Domestic Product (GDP) figure of the Indian economy touched the low 6.5 mark as compared to the 7.1 figure of the previous fiscal estimate.

"Real GVA, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from '111.85 lakh crore in 2016-17 to '118.71 lakh crore in 2017-18". The crucial farm sector is estimated to grow 2.1% in 2017-18, slower than the 4.9% in the previous year, while the manufacturing sector may grow by an annual 4.6%, sharply lower than the 7.9% posted in 2016-17. "GDP growth of 6.5% for 2017-18 implies growth of 7% for the second half". The data showed per capita income is expected to be Rs 1,11,782 in 2017-18. He also indicated that the government could find it hard to achieve its fiscal deficit target of 3.2 per cent of GDP. The second instalment of the Economic Survey released in August a year ago had seen growth at the lower end of the 6.75-7.5% range forecast in February.

Meanwhile, agriculture is expected to grow by a mere 2.1 per cent this fiscal, while manufacturing is estimated to expand by 4.6 per cent. The core sector data for November, the latest release so far, showed the steel and cement sectors registering strong double-digit growth.

But what is worrying is that finance minister Arun Jaitley had projected a GDP growth of 11.75 per cent at current prices in his budget last February (Rs 168.47 lakh crore).

The CSO has primarily used seven-month data to extrapolate for the full fiscal.

Despite the poor estimates, the analysts are optimistic about economic growth in 2018-19. Economists said the advance estimates may have been conservative in its assessment. 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. Thus, in the first half of 2017-18, the economy grew at 6%. "And as the estimates are missing the RBI expectations, the central bank is likely to pause in its next policy meeting in February 2018".

"Economic activity has been picking up over the last three quarters and can be expected to strengthen in the coming period with the manufacturing PMI [Purchasing Managers' Index] now reading at a five-year high of 54, and FMCG demand picking up briskly", Vice Chairman of NITI Aayog Rajiv Kumar said in a written statement.