India's gross domestic product (GDP) will grow by 6.5% in the current fiscal, sharply down from 7.1% growth clocked by it in 2016-17, the Central Statistical Office (CSO) said on January 5, confirming that the hasty implementation of the Goods and Services Tax (GST) has had a toll on economic growth. The GDP in the first and second quarters of this fiscal grew at 5.7% and 6.3% respectively. The forecast has been released a little over three weeks before finance minister Arun Jaitley presents the last full-fledged Budget of this government before the 2019 Lok Sabha elections. "Investment growth of nearly twice of last year's indicate investment reviving", economic affairs secretary Subhas Chandra said on Twitter. The growth in manufacturing sector is expected to be at 4.6% this year as against 7.9% in 2016-17. While factory output data, measured by the index of industrial production (IIP) is available only up to October, most companies are yet to declare their third quarter results, making it hard for official statisticians to gauge the speed of economic expansion. The CSO could actually estimate a faster GVA expansion in the final two quarters, implying but for slower-than-expected GST tax revenue collections, overall growth could have been faster.
The EAC-PM Chairman said the advance estimate numbers only reinforce what was already known - that reforms undertaken by the government will place the economy on an upward growth trajectory, without compromising on fiscal consolidation.
The GDP data could be revised upwards as the current projections are based on incomplete output and corporate income data, amid signs that people are buying more goods and companies are adding new capacities to meet growing demand. A year ago this sector had growth at 5.7%. RBI had forecast a higher GVA growth of 6.7%.
As per the data, the Gross Value Added (GVA) at basic constant prices (2011-12) is anticipated to increase from Rs 111.85 lakh crore in 2016-17 to Rs 118.71 lakh crore in 2017-18.
"Nominal GDP growth is expected at 9.5%". "However, green shoots in investment are visible and they should be nurtured by supportive policies". Construction will see a slight pickup to 3.6% from 1.7%. The predominant narrative would be to attribute this slowdown to the adverse impact of note ban and implementation of GST. Services are forecast to grow 7.6% up from 6.9% past year.
In its first advance estimate for the full financial year, the Central Statistics Office estimated India's real GDP at constant prices (2011-12) in the year 2017-18 to be Rs 129.85 lakh crore, as against the Provisional Estimate of GDP for the year 2016-17 of Rs 121.90 lakh crore.