Govt projects GDP to grow at 6.5 percent in 2017-18
NEW DELHI: India’s economic growth is estimated to slow down to 4-year low of 6.5 percent this fiscal, the lowest under the NDA regime, mainly due to GST impact on manufacturing and subdued farm output.
The Gross Domestic Product (GDP) was 7.1 per cent in 2016-17 and 8 per cent in the preceding year. It was 7.5 per cent in 2014-15.
The Narendra Modi-led NDA government had assumed office in May 2014.
The growth of gross value added (GVA) in manufacturing sector too is expected to decelerate to 4.6 percent this fiscal, down from 7.9 percent in 2016-17.
As regards the farm sector, the expansion in activities in agriculture, forestry and fishing sectors is likely to slow to 2.1 percent in the current fiscal from 4.9 percent in the preceding year.
“Is there an impact of the GST (Goods and Service Tax) on average growth? The answer is, to some extent, of course, and I explain why,” Chief Statistician TCA Anant told reporters after the Central Statistics Office released advance estimates of national accounts on Friday.
Elaborating further, he said, “When we did the first quarter estimates, we had explained this that because of the fact that the GST is going to be implemented from July 1, there will be a natural anticipation of GST... BY the manufacturing sector. Since the first quarter is part of the whole year, the manufacturing includes the first quarter as part of it. Yes, that impact is built into the exercise.”
Commenting on the CSO estimates, Economic Affairs Secretary Subhash Chandra Garg said GDP growth forecast of 6.5 percent for 2017-18 implies growth of 7 percent for the second half of the fiscal.
“(This) confirms strong turnaround of the economy. Investment growth of almost twice of last years indicate investment reviving,” he said in a tweet.
About the agriculture sector, Chief Statistician Anant said, “So far agriculture is concerned, there is a certain amount of statistical base reversion to mean, which is seen because last is very high growth rate after continuous years of drought.”
He further said, “Actual total production figure would be the second highest in a very long period of time. This is not unusual growth rate of agriculture in a good year.”
On recovery, Anant explained that the growth in the first and second quarters was estimated at 5.7 percent and 6.3 percent, respectively and for rest of year, it is worked out at 7 percent, indicating an increasing trend.
The growth of real Gross Value Added (GVA) in 2017-18 is anticipated at 6.1 per cent as against 6.6 per cent in the previous year.
Economic activities were affected by demonetization announced on November 8, 2016, and subsequent implementation of a new indirect tax regime (GST) from July 1 in the current financial year.
According to the CSO, the sectors which registered a growth rate of over 7 percent are public administration, defence and other services; trade, hotels, transport, communication, and services related to broadcasting; electricity, gas, water supply and other utility services; and financial, real estate and professional services.