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
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.
CORE SECTOR OUTPUT UP IN DEC
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