Govt Re­vises 2015-16 GDP Growth Up­wards to 7.9%

Core in­dus­tries too grow 5.6% in De­cem­ber 2016 af­ter rise in re­fin­ery, steel out­put

The Economic Times - - Economy: Macro, Micro & More - Our Bureau

New Delhi: Sup­ported by in­creased in­vest­ment and growth in durable goods, the In­dian econ­omy grew faster in 2015-16 than the ear­lier ex­pected. Data re­leased by the Cen­tral Sta­tis­tics Of­fice on Tues­day showed an up­ward re­vi­sion in the gross do­mes­tic prod­uct ( GDP) growth for 2015-16 to 7.9 % from the ear­lier es­ti­mate of 7.6%.

The first re­vised es­ti­mates for 2015-16 show an in­crease in gross fixed cap­i­tal for­ma­tion (GFCF), a proxy for mea­sur­ing in­vest­ment ac­tiv­ity, to 6.1% in the year from the ear­lier es­ti­mate of 5.3%. The sta­tis­tics of­fice pro­jected in­vest­ment growth of 4.1% in 2014-15.

The re­vised growth, how­ever, could lead to an ad­verse base ef­fect for the 2016-17 growth fig­ures. The Eco­nomic Sur­vey for 2016-17 has fore­cast growth be­tween 6.75-7.5%, lower than the sta­tis­tics of­fice’s 7.1% pro­jec­tion.

“Though this es­ti­mate is closer to the ac­tual growth, it may still be different from the fi­nal num­ber de­pend­ing on un­der­es­ti­ma­tion or over­es­ti­ma­tion of the item/vari­able for which ac­tual data is still not avail­able,” said Su­nil Ku­mar Sinha, prin­ci­pal economist at In­dia Rat­ings & Re­search. Durable goods grew at 14.4% in 2014-15 to 24.3% in 2015-16.

How­ever, the growth for 2014-15 has re­mained un­changed at 7.2% in the sec­ond re­vi­sion of the na­tional ac­counts for the fis­cal. The sta­tis­tics of­fice said the gross value added (GVA) at con­stant (2011-12) ba­sic prices grew at 7.8% in 2015-16 as against 6.9% in 2014-15. In 2015-16, at con­stant prices, the growth of pri­mary (agri­cul­ture, forestry, fish­ing and min­ing and quar­ry­ing), sec­ondary (man­u­fac­tur­ing, elec­tric­ity, gas, wa­ter sup­ply and other util­ity ser­vices and con­struc­tion) and ter­tiary (ser­vices) sec­tors has been pegged at 2.6%, 7.8% and 9.8% as against a growth of 1.8%, 6.1% and 9.5%, re­spec­tively, in the pre­vi­ous year.

Per capita net na­tional in­come at cur­rent prices is es­ti­mated at Rs 86,513 and Rs 94,178, re­spec­tively, for 2014-15 and 2015-16.

Gross sav­ings dur­ing 2015-16 is es­ti­mated at 31.6% of GDP, a de­cline from 32.3% in the year be­fore. The rate of gross fixed cap­i­tal for­ma­tion, a mea­sure of in­vest­ment, de­clined from 33.2% of GDP in 2016-17 from 34.2% in 201516. “The rate of cap­i­tal for­ma­tion in the years 2011-12 to 2015-16 has been higher than the rate of sav­ing be­cause of net cap­i­tal in­flow from Rest of the World (ROW),” the state­ment said.


Eight core in­dus­tries grew 5.6% in De­cem­ber 2016 led by a rise in pro­duc­tion of re­fin­ery prod­ucts and steel. The growth rate of eight in­fra­struc­ture sec­tors -coal, crude oil, nat­u­ral gas, refi-


nery prod­ucts, fer­tilis­ers, steel, ce­ment and elec­tric­ity -- was 2.9% in De­cem­ber 2015. It was 4.9% in Novem­ber 2016.

The core sec­tors, which con­trib­ute 38% to the to­tal in­dus­trial pro­duc­tion, ex­panded 5% in April-De­cem­ber 2016 com­pared to 2.6% growth in the same pe­riod last fi­nan­cial year, ac­cord­ing to data re­leased by the com­merce and in­dus­try min­istry.

“The pickup in core sec­tor growth in De­cem­ber 2016 rel­a­tive to the pre­vi­ous month is un­likely to prove sus­tain­able, with the spike in growth of steel pro­duc­tion ex­pected to be short-lived,” said Aditi Na­yar, prin­ci­pal economist at ICRA. Re­fin­ery prod­ucts and steel pro­duc­tion jumped 6.4% and 14.9%, re­spec­tively dur­ing the month un­der re­view. How­ever, crude oil, fertliser, nat­u­ral gas and ce­ment out­put re­ported con­trac­tion.

The re­vised growth could lead to an ad­verse base ef­fect for the 2016-17 growth fig­ures

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