First estimate pegs GDP growth rate at 6.5% for FY2017-18

06 January, 2018, 01:57 | Author: Lester Mason
  • There is a decline in new projects and fresh investment Congress leader P. Chidambaram claimed in a statement

Its reactions came after the estimate of national income for 2017-18, released by the Central Statistics Office (CSO), showed that implementation of GST and subsequent slowdown in the manufacturing sector was expected to drag down the country's growth rate to 6.5 per cent from 7.1 per cent achieved in 2016-17.

A year ago the government changed the presentation of Union Budget from February-end to 1 February that started the practice of unveiling advance GDP forecast in January. "Investment growth of nearly twice of last year's indicate investment reviving", economic affairs secretary Subhas Chandra said on Twitter.

"Agriculture, forestry and fishing" sector is estimated to record a GVA growth of 2.1 per cent during 2017-18 as against 4.9 per cent in the previous year, while manufacturing growth is estimated to be 4.6 per cent this financial year, down from 7.9 per cent last year. The Organisation for Economic Co-operation and Development (OECD), has forecast global economic growth at 3.5% in 2017, up from 3.1% in 2016.

The CSO forecast comes three weeks before the Modi government comes out with its final full-year budget before the general election due in May 2019.

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This may affect the fiscal deficit, which the government had hoped to cap at Rs 5.46 lakh crore this year.

"In a way, we are being conservative in our estimates", he said, and added that the statistics office has estimated the numbers assuming that budgetary targets will be met. Growth is below the government's early estimate. As per the new methodology followed by the CSO, GDP is calculated by adding product taxes to GVA at basic prices and removing subsidies. "GDP growth of 6.5 per cent for 2017-18 implies growth of 7 per cent for the second half".

Moody's Investors Service had raised India's sovereign rating for the first time in over 13 years, saying that growth prospects have improved with continued economic and institutional reforms. The CSO's estimate of national income for 2017-18 showed the GDP at constant (2011-12) prices for 2017-18 is likely to attain a level of Rs 129.85 lakh crore. "While this gives the impression of a downturn, in reality, growth has bottomed out in the first quarter of the current year and is now on a recovery", the Confederation of Indian Industry (CII) said in a release. Farm output is expected to slow to 2.1 per cent from 4.9 per cent. Construction will see a slight pickup to 3.6% from 1.7%. Services are forecast to grow 7.6% up from 6.9% previous year.

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.

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